HDFC looking to sell its realty and digital arms to Quikr

HDFC, India’s largest private sector bank and mortgage lender, is in talks with online classifieds company Quikr to sell its brokerage business HDFC Realty and its digital business HDFC Red. The deal, expected to be in the range of INR350-400 crore, will give the mortgage major 5% stake in Quikr in return. The startup, valued at $1.5 billion, last raised $150 million from Kinnevik AB, Tiger Global Management and Steadview Capital in April’15. However, it’s financial position tells a different story. In FY16,
Quikr clocked net sales of INR41 crore, against INR25 crore in FY15. Its loss surged to INR534 crore from INR450 crore in the same period.

If the deal goes through, then it will be the second big ticket acquisition after it acquired Tiger Global Management-backed real estate platform CommonFloor in Jan’16 for $120 million. Rutvik Doshi, Director at Inventus Capital Partners, said that “The rental business is fragmented and largely dominated by brokers. It is hard to make money there because transactions sizes are low. In buying and selling of properties, there are two aspects—resale and new properties. New properties have a huge marketing budget. In resale, challenges are the same as rental, around discovery, marketing, weeding out intermediaries. Hence, it makes sense to focus on new properties as you can make money there”.