Packer plunges $330 million into American real estate portal Zillow: Has he found the next REA?

James Packer has become the second-largest shareholder of Zillow, plunging $330 million into the Seattle-based real estate website.

A 9.3% stake was bought yesterday by Packer-controlled Cavalane Holdings, which bought 3 million shares for Packer’s Consolidated Press International Holdings yesterday.

It’s not the first time Packer has ploughed money into online marketplaces.

Packer, along with close friend Lachlan Murdoch, has been arguably the greatest single beneficiary of the Australian dot.com boom.

He was one of the earliest investors of SEEK, having bought a 25% stake in 2003 for $33 million in 2003. When the business listed, Packer’s stake was worth $150 million. By the time he sold out, he had made $440 million from his investment.

He was also an early investor in Carsales.com.au, putting $100 million for a stake in the company that sold for $500 million a few years later.

In buying a stake in Zillow, Packer could be hoping to replicate the success of Murdoch, who invested nearly $10 million into RealEastate.com.au for a 66% stake in the company. That stake went on to be worth $2 billion.

Zillow already has a market capitalisation of $US3.5 billion, and its stock price has increased three-fold since the start of 2013. This suggests Packer isn’t getting in on the ground floor this time.

Last month, Zillow’s founders and executives sold off $205 million worth of stock, leading some to suggest the stock’s golden run could be ending.

According the Australian Financial Review’s ‘Street Talk’ column, Packer was convinced on the investment by Caledonia’s chief investment officer Will Vicars, who said Zillow had potential to dominate the market in America in the same way that RealEstate.com.au (owned by REA group) has done in Australia.

Compared to Australia, Vicars reportedly argued, American real estate was far less likely to be sold online, suggesting future growth in the sector.