Singapore's sovereign wealth fund GIC Private is a junior partner in the $2.56 billion takeover bid for Trade Me Group and more investors may come on board if the deal gets the go-ahead next month.
New Zealand's biggest online marketplace will hold a special meeting in Wellington next month, where its 9,458 shareholders will decide whether to approve a $6.45 per share offer from UK private equity firm Apax Partners.
The bid, which has the blessing of the Trade Me board, includes a premium for control and trumps independent adviser Grant Samuel's $5.93-$6.39 valuation range.
Apax came out of the blue with a $6.40 a share takeover bid - via a scheme implementation agreement - last year, and beat out rival Hellman & Friedman in securing the board's support in lifting the price.
The shares were trading at $5.10 before the interest became public and recently traded at $6.41, up 0.2 per cent today.
Apax has past form with online classifieds businesses in the UK, North America, Europe and China. Grant Samuel, in its report, notes that the buy-out firm "will no doubt be seeking to transfer some of this digital investment experience through to Trade Me".
The notice to shareholders of the April 3 meeting notes the Singaporean wealth fund will own about 20 per cent of Trade Me's holding company, and that other separate minority investors may end up owning up to 5 per cent.
The exact percentages haven't been settled, but Apax will definitely hold a majority stake.
The takeover is via a scheme implementation agreement, which has a lower bar to get shareholders over the line. The deal requires 75 per cent support and at least half the company's votes cast, as opposed to the 90 per cent threshold of acceptances of an offer needed in a formal takeover to trigger compulsory mop-up provisions.
The deal got Overseas Investment Office approval earlier this week.
If shareholders reject the offer, Grant Samuel anticipates Trade Me will continue on as a listed company and pursue existing strategies. That includes building new income streams from new business models that complement its existing services.
"It is also evaluating partnering with specialist providers and taking a percentage of revenues generated from a sale facilitated by Trade Me," the report said. "Such services could include the expansion of its logistics offering and the promotion of consumer finance and insurance products offered by its customers."
Grant Samuel also notes that Trade Me is investing in developing a data platform, saying the online auction site is only making limited use of the "vast array" of data it collects.
The report also said Trade Me has identified potential growth through full or partial takeover targets in adjacent sectors. The company was touted as a potential bidder for the Stuff news organisation, which Sydney-based Nine Entertainment Co is seeking to exit since its merger with Fairfax Media Group last year.