Google Inc. (GOOG)’s new investment arm is buying a minority stake in Auction.com LLC, the largest U.S. online real estate auction firm, for $50 million.
The investment by Google Capital, which expects to spend about $300 million this year to back late-stage companies, is the first in a real estate venture for the unit of the Mountain View, California-based Internet search firm. The deal values Auction.com at $1.2 billion, the Irvine, California-based company said today in a statement.
“Like EBay kind of drove transparency and created a marketplace for hard-to-find items, Auction.com is creating transparency in part of the real estate market,” David Lawee, head of Google Capital, founded last year, said in a telephone interview. “Here, you can go on to a site and see thousands of properties that are listed for sale that would be great investment opportunities.”
Auction.com, which sold $7 billion in real estate online last year, uses countdown clocks similar to those on EBay Inc.’s website to broker the sale of properties and non-performing loans. It has auctioned $26 billion of assets since 2007, diversifying from foreclosed homes sold on courthouse steps to selling luxury properties, office buildings and European real estate.
The Google investment will help Auction.com expand and diversify its technology, including offering more services for mobile customers, according to Jeff Frieden, the company’s co-founder and chief executive officer.
“It’s a very strategic partnership,” Frieden said in a phone interview. “It’s about a lot more than just the money.”
Google Capital will have a seat on Auction.com’s seven-member board, according to the statement. Other Auction.com stakeholders include Stone Point Capital LLC, a Greenwich, Connecticut-based investment firm headed by former Goldman Sachs Group Inc. Chairman Stephen Friedman; Barry Sternlicht’s Starwood Capital Group LLC and Starwood Property Trust Inc., which acquired separate stakes last year; and funds managed by Fortress Investment Group LLC. (FIG)
Google Capital last month put $40 million into Renaissance Learning Inc., an education-software company. Last year, it was part of a $125 million investment in LendingClub Corp., an online peer-to-peer loan service in San Francisco, and it joined private-equity investors backing SurveyMonkey Inc., a provider of online surveys.
Auction.com, as of yesterday, had listings on its website for 19,772 residences, 138 commercial properties, 83 land parcels and 41 real estate loans.
JPMorgan Chase & Co. served as the private-placement agent for Auction.com for the investment.
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