Real estate listings site Trulia announced this morning that it is looking to raise $150 million so it can move quickly on potential acquisitions.
The newly public company filed an amendment to its Form S-1 to the U.S. Securities and Exchange Commission, which will partially release some shares that were locked up. Trulia and some of its stockholders are proposing to sell an aggregate of 5.25 million shares in a primary and secondary offering.
Trulia revealed that it will offer 3.5 million in shares, and stockholders are offering 1.75 million. The last reported sale price of Trulia stock as of Friday was $30.44 per share price on the New York Stock Exchange. The company notes that the follow-on offering altogether could raise as much as $164 million.
“The capital is to really to strengthen the cash reserves for new product lines and acquisitions,” said Ken Shuman, the company’s vice president of communications in an interview. He confirmed that Trulia is not looking into any mergers opportunities.
The company has not made an acquisition since the buy-up of Movity in December 2010, which Shuman claims is a deliberate choice as “most acquisitions fail and tend to be a distraction for senior management.”
Last year, Trulia’s corporate development team evaluated dozens of startups but didn’t move forward. “There has to be a really compelling reason to acquire as we’re often better off building,” he explained.
But with the company filing for its IPO last year, it maybe reevaluating its “build first” mentality. Shuman said the company is considering tools and services for real estate agents, online rentals (“a huge, emerging business”), mortgages-focused startups, and small companies that would support “international expansion.”
Currently, Trulia has almost 5 million homes listed on its site. Potential buyers can easily search, visualize, and track properties, as well as access information about nearby schools and crime.
With chief competitor Zillow making several buy-ups in 2012 (the company spent close to $60 million to acquire Hotpads and RentJuice), expect to see some activity in the real estate sector.
Trulia is hiring in its marketing and engineering teams to support the expansion. Last week, the company’s data science team rolled out a “suggests” feature to introduce Netflix-style recommendations to its website and mobile apps.
The company admits in the filing that it has a “history of losses” and may not reach profitability anytime soon. Major risks for investors include a limited operating history, the possibility that real estate professionals won’t continue to subscribe, that it won’t be able to maintain accurate real estate information.
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