Idealista IPO pushed back by COVID-19 crisis – sources

05 May 2020 - 07:03 am UTC

by Rupert Cocke, Ryan Gould, Amy-Jo Crowley and Maryna Irkliyenko, with additional reporting by Iñaki Miguel

  • Company remains solid IPO candidate with 2H listing possible
  • PEs came close to pre-emptive offer earlier in the year

 

The expected IPO of Idealista, a Spanish property portal, has been pushed back by the novel coronavirus crisis, said six sources familiar with the situation.

 

The Madrid-based sponsor-backed company was approached by potential private equity suitors earlier this year, but talks broke down, two of the sources said. But Idealista remains a solid IPO candidate and could be one of the first to go ahead with a listing in the second half of the year, said the first source familiar with the situation.

 

The most optimistic scenario would be of an October IPO, but that depends on how quickly the market recovers, said the second source. Although the IPO is “impossible” in the current environment, it could come back from September onwards, agreed the third source.

 

An IPO in the second half seems optimistic, said the fourth source. Some point next year seems like a more credible timeframe, this source said, adding that the company will then have more visibility on revenues.

 

Property is very cyclical and rising unemployment as a result of disease-control lockdowns will have a direct impact on Idealista's business model, the third source said. An economic crisis means there will be fewer buyers for properties and owners will be more nervous about rental agreements, this source said.

 

Apax Partners, the majority owner of Idealista, hired Bank of America Merrill Lynch and Morgan Stanley to advise on an IPO-led exit that could value the business at around EUR 1.3bn, as reported.

 

However, the company’s equity story could be affected by the Spanish real estate portal’s exposure to local political developments and regulatory risks, this news service reported in February.

 

In January, Spain’s Socialists formed a minority coalition with anti-austerity party Unidas Podemos (UP), which ran on policies including rental controls, expropriating unused property, fighting against speculation, banning evictions and ending real estate investment trusts (REITs), as reported.

 

Given the negative circumstances surrounding the IPO, putting it on ice for the time being is “perfectly logical,” said the fifth source.

 

Earlier this year, two private equity (PE) firms were very close to making pre-emptive offers for the business, said the fourth source and the sixth source familiar with the situation. Both got cold feet because of differences in valuation expectations, the sources said.

 

The pandemic was a key factor in the breakdown of talks, said the fourth source, adding that there are also question marks over the Italian market, which has only recently broken even for Idealista.

 

A sale to a long-term investor could also make sense, the fourth source said. However, it would take some time to work out a valuation given the uncertainties surrounding the virus, this source added.

 

Apax’s preference is for an IPO, this news service reported in January. However, deal-hungry PEs could offer a premium, it was said at the time. Apax is not actively considering a sale, said the first and second source.

 

Idealista and Apax declined to comment.