Frontier Digital Ventures Ltd (ASX:FDV) is pursuing a legal restructure of its operating companies into three separate geographical groups to enhance growth opportunities and support the company at its full potential.
Restructure is expected to improve operational efficiencies, increase organic and inorganic growth opportunities, enhance management culture and accountability, foster greater knowledge sharing and innovation and strengthen its regional presence, as well as increase monetisation options over time.
The legal restructure is subject to ongoing legal, accounting and taxation advice, with more details to be released in due course.
The company’s mission is to become the leading global operator of online marketplaces in emerging markets.
It aims to augment traditional advertising revenue with transaction-based revenues, which underpins long-term growth.
Proven business model
The company is focused on unlocking significant new revenue opportunities closer to the transaction of property, auto and general classifieds.
FDV Group is now approaching cash flow breakeven, with a strong balance sheet proving significant funding flexibility.
Further, its equity-aligned board and management support the ongoing focus on long-term shareholder value.
Under around a year of FDV ownership, Fincaraíz, Avito, Tayara and Yapo are all facilitating transactions and achieving significantly improved financial performance.
Fincaraíz is facilitating property transactions, closing 25 transactions year to date, with significant momentum building and a pipeline of 100 property projects.
Avito has launched property and auto transactions as well as developing joint products with Moteur, the leading new car marketplace in Morocco.
Yapo continues to exceed expectations, closing its first property transaction in October 2021.
While early-stage, these acquisitions are all following in the transaction model footsteps of Zameen and InfoCasas, as two of FDV’s fastest-growing operating companies.
New FDV group structure
Frontier Digital is restructuring its companies into three separate geographical groups:
➢ FDV LATAM (Latin America);
➢ FDV Asia; and
➢ FDV MENA (Middle East and North Africa).
FDV LATAM highly strategic footprint
FDV LATAM has a highly strategic footprint across 12 key markets, with strong property revenues.
Its subsidiary InfoCasas’ successful execution of the transaction model provides a blueprint for other operating companies across the region.
Frontier Digital has 100% ownership of InfoCasas, Fincaraíz, the leading property portal in Colombia, and Yapo, the leading general classifieds portal in Chile, which facilitates greater control and economic benefits.
Further, the common language across all markets provides opportunities for greater collaboration.
In the third quarter, it recorded $38 million annualised revenue and was EBITDA positive at the portfolio level.
The restructure increases the monetisation opportunities, which includes liquidity events involving US-based companies/investors and even the possible NASDAQ listing of FDV LATAM, among others.
FDV Asia
In Asia, it has market leadership across four dynamic markets – Myanmar, Pakistan, The Philippines and Sri Lanka, with Hoppler the leading property transaction portal in Manila.
It has both property and auto portals in Pakistan, the Philippines and Myanmar.
In the third quarter of 2021, it recorded $22 million annualised revenue and was EBITDA positive at portfolio level.
The Pakistan market is well understood by European investors, providing potential future liquidity pathways.
Frontier Digital also noted the general strong M&A activity in Asia.
FDV MENA
It has market leadership across all four markets in Morocco, Tunisia, Nigeria and Ghana, with two highly complementary businesses in Morocco across the property, auto and general verticals.
Its 100%-owned Avito, the number one general classifieds player in Morocco, and Moteur teams are co-locating, creating greater collaboration and shared learning across the businesses.
Property transaction trials were launched for Avito and Tayara, a leading general classifieds platform in Tunisia, and both have successfully closed transactions in 2021, with a number of new housing projects in the pipeline.
In the third quarter 2021, it recorded $9 million annualised revenue with a significant improvement in EBITDA.
Avito, reported its first EBITDA positive month under Frontier Digital ownership.
Although monetisation pathways may be less progressed compared to other regions, the company highlighted that the businesses need time to successfully implement the transaction model.
Increased monetisation options
FDV founder and chief executive officer Shaun Di Gregorio said: “We are pleased to announce the intended restructure and release an updated investor presentation, which shows FDV’s excellent performance continued in 3Q 2021.
“The restructure is expected to improve operational efficiencies, increase organic and inorganic growth opportunities, enhance management culture and accountability, foster greater knowledge sharing and innovation, and strengthen FDV’s regional presence.
“In addition, the restructure should lead to increased monetisation options over time.
“We remain focused on augmenting our market leadership positions with high growth transaction-based revenue, in line with FDV’s long-term value-creation strategy for shareholders.”
Strong track record
Founder and CEO Di Gregorio is one of the top global online marketplace executives with a strong track record of long-term value creation.
The former CEO of iPropertyGroup, he spearheaded the transformation of iProperty Group from a US$15 million small online business with a market capitalisation of US$600 million.
As general manager of the core Australian REA Group business and one of its global leaders, he grew the business alongside a team, with revenue of A$5 million into a company with more than 300 staff and revenue exceeding A$150 million.
Presenting at Proactive webinar
Di Gregorio will outline the company's investment proposition at the Proactive Online Marketplace Business Webinar next Tuesday from 12 noon Sydney time.
To register for the webinar, click here.