Some interesting industry news from Banking Day for property and technology boffins (the company I work for, Rismark International, produces world-class automated property valuation model technology in partnership with RP Data, and, of course, the suite of market-leading RP Data-Rismark hedonic house price indices). RP Data spends more on data and technology than its competitors turn over in revenue--they are a seriously capable company:
Property information supplier RP Data yesterday announced the realisation of a long term ambition to purchase the ValEx Group and the VMS Division of Sandstone Technology, to control the Australian desktop property valuation sector.
RPData will pay $26 million for ValEx and $20 million for VMS. This value the two business at five times the expected 2010 EBITDA of the business, RPData said.
The purchase will take RPData to a 70 per cent share of a valuation services market that the firm estimates to be worth $500 million a year.
Banks are the primary users of desktop valuations, and increasingly prefer them over sending a qualified valuer to inspect a property.
Graham Mirabito, managing director of RPData said, “We had been looking at this deal for well over a year, and funding had not really been a major problem due to some very supportive major shareholders.”
First American Core Logic, the firm’s major shareholder, will provide a $14.0 million line of credit. Commonwealth Bank will provide a loan of $29.7 million (at an interest margin of between 160 basis points and 215 bps over bills). The firm will also sell $2.3 million in new shares.
Net debt at RP Data will increase to $59.4 million, or 60 per cent gearing post the, two and a half times the prior level.
RP Data valuation transaction volumes will increase ten fold to over one million post the acquisitions, which Mirabito said will increase compliance and risk analysis quality.
“One of the big implications here is having a major hub for the industry which will reduce risk, as we will be able to catch patterns of behaviour that typically lead to a loss, or don’t make sense”.
Pricing unique assets such as ValEx and VMS can be very difficult, with Mirabito confirming market rates were paid and were not financially forced sales.
“These are properly priced assets, and we are not after distressed assets. Our strategy has always been to acquire quality.
“We would rather pay the appropriate price for an asset that’s in good shape, and take it to the next step”.
Mirabito said RP Data was still looking in the market for any other purchase opportunities since no other acquisitions have been made in the past two years.
