Bengaluru: Online classifieds firm Quikr India Pvt. Ltd, one of India’s most valuable start-ups, bought real estate portal CommonFloor in a distress sale orchestrated by Tiger Global Management Llc, the influential US-based hedge fund that is an investor in both.
Quikr, valued at an estimated $1 billion, and CommonFloor (maxHeap Technologies Pvt. Ltd) didn’t disclose the terms of the transaction, but two people familiar with the matter said Quickr paid $120 million in an all-stock deal. The people spoke on condition of anonymity.
CommonFloor was valued at more than $150 million when it last raised Rs.60 crore from Google Capital in December 2014. The company raised a total of Rs.321 crore from Tiger, Accel Partners and Google Capital since 2011.
Quikr and CommonFloor have valuations that seem disproportionate to their revenue.
Quikr reported sales of Rs.24.78 crore for the year ended 31 March 2015 while CommonFloor generated sales of Rs.45.76 crore for that year, according to documents with the Registrar of Companies.
Despite having generated revenue that is much larger than Quikr’s, CommonFloor attracted a much lower valuation because of the valuation metrics used by e-commerce investors that may seem peculiar to shareholders in traditional businesses.
Classifieds firms such as Quikr are given more generous valuations because of a large customer base that can potentially be monetized in future through advertising and the winner-takes-all nature of the business.
Quikr primarily has just one rival to contend with: Olx, which is backed by Naspers Ltd, a South African mass media company. Online real estate, on the other hand, is a crowded market with at least five well-funded companies, apart from upstarts that keep cropping up.
Apart from boosting Quikr’s sales, the CommonFloor deal will make it easier for the combined entity to raise money at a time investors have turned cautious on Indian start-ups after a boom that lasted until the middle of 2015.