Simon Baker-led investment group grabs stake in online real estate company

Classified Ad Ventures, the investment and consulting group set up by former realestate.com.au boss Simon Baker, has paid $500,000 for a 4% stake in listed classifieds business IPGA.

IPGA owns and operates a leading network of property portals in key Asian markets, including Singapore, Malaysia, Hong Kong, Taiwan, India and the Philippines, under the iProperty.com brand.

Baker, who took realestate.com.au’s revenue from $7 million to $155 million before being controversially dumped as chief executive last year, says he was attracted to the business by the fact it is a clear market leader in big markets such as Malaysia and Hong Kong.

“We know that anyone who ends up being a clear market leader can earn significant profits over time, and I think their approach in having a number of plays is smart,” Baker says.

“It just takes one of those plays to be successful and this company will increase significantly in value.”

Baker says the real estate classifieds market in Asia is mature but growing quickly. He says his group Classified Ad Ventures (CAV) will take a hands-on role with the IPGA management team to help them build revenue and traffic.

“I can never be a passive shareholder. Our objective is to work with them on strategy and operations.  Looking at these markets and these businesses, I have a lot of déjà vu with where realesate.com.au was six to eight years ago.”

CAV, with staff that includes 10 former realestate.com.au executives, had made six investments since Baker set it up in the middle of last year, mainly in real estate classifieds business.

The company, which also offers consulting services to online classifieds businesses, is attempting to build a portfolio of online classifieds investments around the world, rather than attempting to build sites itself.

“At the moment what we’d rather do is work with other passionate people who have established these businesses. We get to spread our risk,” Baker says.

In the current economic climate, there is no shortage of deals available, and Baker says the “exuberance” around pricing has also eased.

“The question is not are there any deals out there. It’s a question of which deals we do.”

Baker says that while real estate classifieds businesses are battling a cyclical downturn, most are actually operating very well and easily out performing their more expensive print competitors.

It appears investors are also taking another look at the sector. While IPGA’s share price has fallen from 20c to around 12c over the past 12 months, realestate.com.au’s stock is up from $3.60 to $4.29 since the start of the year, and the share price of British group RightMove has almost doubled over the same period.

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