Billionaire Packer Buys Zillow Stake as Housing Rebounds
Australian billionaire James Packer bought 9.4 percent of Zillow Inc., becoming the second-biggest shareholder in the U.S. real-estate website, after housing starts in the country rose to a five-year high.
Cavalane Holdings Pty bought about 3 million shares, Seattle-based Zillow said in a filing, without giving financial terms. The stake is valued at $298 million based on Zillow’s last closing price. Cavalane, controlled by Packer, is Zillow’s largest shareholder after Caledonia Private Investments Pty, according to data compiled by Bloomberg.
Packer, who has a net worth of $6.1 billion according to the Bloomberg Billionaires Index, is betting on improving demand in U.S. housing. Confidence among U.S. homebuilders climbed in August to the highest level since 2005 and housing starts in March broke above 1 million for the first time since 2008.
“He obviously thinks it’s the right time to be getting into that business,” Alice Bennett, an analyst at Commonwealth Bank of Australia in Sydney, said by phone. Packer “trades these stocks around where he sees value. He’s been in and out of Seek twice,” she said, referring to Seek Ltd., a Melbourne-based job advertisements website.
Zillow rose 2.7 percent to $99.09 yesterday. The stock has more than tripled this year, after advancing 23 percent in 2012.
The company operates the largest U.S. real-estate website with 61 million unique users in July. It is the most richly valued among 33 real-estate services businesses worldwide that have analyst estimates tracked by Bloomberg.
Its enterprise value of $3.72 billion is about 106 times forecast earnings before interest, tax, depreciation and amortization over the next 12 months, the data show. Trulia Inc. (TRLA), the second-most popular real estate website according to Experian Hitwise data quoted at marketingcharts.com, has the next highest valuation with a multiple of 54.
Packer and Mark Arbib, a spokesman for his family company Consolidated Press Holdings Ltd., didn’t reply to an e-mail seeking comment.
Demand for new homes is supporting the U.S. housing market amid rising mortgage rates, while existing home sales hit a monthly rate of 5.39 million in July, their highest level since November 2009.
“The real-estate market is very hot,” Zillow Chief Executive Officer Spencer Rascoff said on Bloomberg’s “Surveillance” program on Aug. 20. “The market is back and the parts of the country that have bounced back the most were the ones that were in the doldrums.”
Zillow said the same day that it would sell 5.02 million shares at $82 each to raise $412 million after spending $50 million buying StreetEasy, which provides sale and rental listings in New York.
The Zillow stake is Packer’s most valuable investment after the 50 percent share his family company Consolidated Press has in Crown Ltd. (CWN), data compiled by Bloomberg show.
Crown owns hotels and gambling complexes in the Australian cities of Melbourne and Perth, and 34 percent of Melco Crown Entertainment Ltd. (MPEL), owner of Macau’s City of Dreams casino.
In August, Packer sold about A$261 million ($238 million) of shares in jobs website Seek and fund manager Magellan Financial Group Ltd. (MFG) that were held by Cavalane, the vehicle he used in 2010 to buy into broadcaster Ten Network Holdings Ltd. (TEN)
Cavalane, with a registered office at Consolidated Press’s address at 54 Park Street, Sydney, had A$272 million in net assets at 30 June, 2012, according to accounts filed with Australia’s corporate regulator. It’s wholly owned by Consolidated Press International Holdings Ltd., registered in the Bahamas, the accounts show.
Consolidated Press also has a 25 percent stake in investment manager Ellerston Capital Ltd., which has about $1 billion in investments, according to data compiled by Bloomberg. Those include a 6.1 percent stake in Treasury Wine Estates Ltd. (TWE), the world’s second-largest listed wine company; a 5.6 percent share in cement company Boral Ltd.; and 6.8 percent of slot machine maker Aristocrat Leisure Ltd.
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