In late October, PropertyGuru's board huddled with investment bankers from Credit Suisse Group, UBS Group and others to discuss the Singapore start-up's impending initial public offering (IPO).
Talks with potential investors had coincided with a slump in Australian tech stocks; people were starting to question its targeted valuation of A$1.36 billion (S$1.27 billion).
Speaking from Sydney was PropertyGuru chief executive officer Hari Krishnan. He recalled discussions around a key question: "Why are we doing this IPO in the first place?"
Expected proceeds of A$380 million were primarily to be used for pursuing growth, including acquisitions. A sale would also give existing shareholders in the real estate classifieds marketplace a chance to realise some value. The money was not needed to fund ongoing operations.
Two days before PropertyGuru's shares were due to start trading, the board unanimously agreed to pull the plug.
"We decided we don't want to list unless we're completely on the front foot and charging," Mr Krishnan, 41, said in his first interview since the company withdrew the IPO. "We're not going to limp out into the world."
PropertyGuru, 58 per cent-owned by TPG Capital and KKR & Co, could make another attempt to go public as soon as next year if market conditions are conducive, Mr Krishnan said. But this time, more options will be considered, including a listing in Singapore or the US.
For Mr Krishnan, who had been pushing hard for an orderly transition into a publicly listed company, the failed IPO was a rare setback.
"What's hurting is your ego, not the fundamentals of the business," he said. "We have a lot more clarity now. We will be validated over time."
CONDITIONS LESS THAN OPTIMAL
We decided we don't want to list unless we're completely on the front foot and charging. We're not going to limp out into the world.
PROPERTYGURU CHIEF EXECUTIVE HARI KRISHNAN, on the Singapore start-up's IPO withdrawal.
PropertyGuru's IPO was one of the most-anticipated events in Singapore's tech scene this year. The 12-year-old company, started by entrepreneurs Steve Melhuish and Jani Rautiainen the same year the iPhone was launched, has become a household name in the property-crazed city state. Today, it is the largest real estate marketplace in South-east Asia, with operations in five countries, including Vietnam, Malaysia and Thailand.
But while PropertyGuru is the go-to site for home hunters in South-east Asia, it is little known in Australia. That contributed to the deal's undoing, according to Associate Professor Lawrence Loh of the NUS Business School in Singapore.
"It's a good company with proven track records in local markets, but it's not yet in the league where international players follow them wherever they go, including off the beaten track like the Australian Stock Exchange in Sydney," he said.
This year has also been an awful one for IPOs in Australia.
More than US$1.5 billion (S$2 billion) of planned share sales have been withdrawn, the highest since 2008. Financial services firm Latitude Financial Group scrapped what would have been the biggest IPO of 2019 just one week before PropertyGuru was due to list. Software company WiseTech Global tumbled 24 per cent between Oct 15 and Oct 21, while Afterpay's stock fell 22 per cent.
PropertyGuru's misadventure is part of a broader trend in the tech sector, where there has been a disconnect between private valuations and public markets.
Uber Technologies, one of the world's most-heralded start-ups, has dropped about 35 per cent since its May IPO. WeWork had to pull its planned offering after investors baulked at its lofty valuation, enormous losses and questionable governance.
PropertyGuru's shares were marketed in an indicative range of A$3.70 to A$4.50. But the company is "at best fairly valued at the low end of the IPO price range," Global Equity Research analyst Arun George wrote on Smartkarma ahead of the planned sale.
Mr Krishnan defends that valuation, noting that PropertyGuru is generating free cash flow while revenue has grown at more than 25 per cent a year on average since 2016. The firm posted net cash flow from operating activities totalling $7.1 million last year, compared with negative cash flow in 2017, the group's 2018 financial statements show.
Revenue, meanwhile, is forecast to grow 44 per cent to $85.6 million this year, while net loss is expected to narrow to $6.1 million from $12.9 million last year, according to PropertyGuru's prospectus.
Next year, PropertyGuru plans to double down on its efforts in Vietnam and expand its mortgage financing services business in Malaysia and Singapore. Earlier this month, it hired former Samsung Electronics executive Robert Vu as CEO of its Vietnamese unit Batdongsan.com.vn
Mr Krishnan, who used to work at LinkedIn, has been running PropertyGuru since 2016, when former CEO Melhuish decided to take a step back to spend more time with family. Mr Melhuish still serves as a board member and adviser.
One benefit of the gruelling process of getting the company IPO-ready has been more transparency and improved corporate governance, Mr Krishnan said. PropertyGuru may voluntarily disclose its financial statements in the future, he added. "We are an unlisted public company now."