LDC has conditionally agreed to sell Property Software Holdings Limited (together with its subsidiaries “The Property Software Group” or “PSG”) to Zoopla Property Group Plc (LSE: ZPLA) (“ZPG” or “the Group”), the digital media and lead generation platform, for £75m.
LDC originally backed the £17.8m management buyout of PSG from Guardian Media Group in 2013. Together with management, it supported the development of PSG’s cloud-based offering, which now accounts for almost 50 per cent of revenues, and the acquisition of its smaller rival, Jupix, in June 2014. Sales grew 56 per cent between 2014 and 2016 from £10.2m to £15.9m.
The sale would deliver a 4.2x money multiple for LDC and an IRR of around 80 per cent.
ZPG owns and operates some of the UK's leading online consumer brands including Zoopla, PrimeLocation and uSwitch, which it also acquired from LDC in April 2015.
Established in 2007, PSG is the UK’s market-leading provider of software solutions to property professionals, used in over 8,000 agency branches. PSG provides workflow tools to over 40,000 estate and lettings agents across the UK through its innovative cloud-based (Alto, Jupix) and desktop (Vebra, Core, CFP) software products. Its products provide essential systems for the day-to-day management of inventory, marketing and communications as well as diary management, chain progression, business reporting tools and financial processes.
In addition to its market-leading software products, PSG’s newest products, MyPropertyFile and MoveIT, provide agents with digital platforms for engaging more effectively with their clients and generating additional revenue streams from a variety of property-related services.
ZPG said the acquisition was a core part of its continued mission to be the most effective partner for UK property professionals and will enable the enlarged Group to offer agents the UK property industry’s first end-to-end solution including software and CRM, digital marketing and market insight tools and further revenue opportunities.
Post completion, PSG will continue to operate as a standalone platform and brand with business as usual and the PSG team becoming an integral part of the wider Group. Mark Goddard, CEO of PSG, will become Managing Director of the Group’s Property Services division, reporting to ZPG Founder & CEO, Alex Chesterman.
Completion is conditional upon either the cancellation of PSG’s existing FCA Consumer Credit License or FCA approval of the change of control of PSG, whichever is the earlier.
Alex Chesterman, Founder & CEO of Zoopla Property Group Plc said, “This acquisition is a game-changer, combining ZPG’s best-in-class property marketing solutions with PSG’s best-in-class property workflow solutions, and will transform the services available for both UK agents and consumers.
“We will be able to offer UK property professionals an unrivalled proposition supporting them with their software and CRM solutions, digital marketing requirements, market insight tools along with providing them a range of new revenue opportunities through PSG’s MoveIT platform.
“Our ambition has always been to be the most effective partner to the UK property industry and this deal will allow us to work more closely with our agent partners and offer them an even more compelling service. I look forward to welcoming Mark and his team to the ZPG family.”
Mark Goddard, CEO of The Property Software Group added, “LDC has been the perfect business partner on every level. We can’t thank the team highly enough for the strategic, financial and operation support they have provided, which has truly transformed the business and leaves us in fantastic shape for the next stage of our exciting journey.
“I am very proud of what we have achieved over the last nine years, but it is just the start. We’ve had a long-standing relationship with the team at ZPG and are incredibly excited to continue our journey as part of their growth and innovation story. We are very much looking forward to continuing to develop unmatched software tools and innovative products and to delivering even better value to our clients.”
Alastair Weinel, Investment Director at LDC, said: “PSG has achieved impressive growth and development over the last three years, which is credit to the ambition, vision and commitment of its management team and our partnership. The acquisition represents excellent outcome for its shareholders, employees and customers. Being part of a group like ZPG provides further opportunity to continue expanding its reach and presence in the property sector. This deal underscores LDC’s highly successful strategy of supporting the management teams of fast growing technology and software businesses. We wish the management team every success for the future.”