Lopes and QuintoAndar shut partnership. Prelude to a merger?

Lopes has just closed a commercial partnership with QuintoAndar, a move that brings one of the biggest real estate companies in Brazil closer to one of the startups that tried the most to ‘disrupt’ the sector.

The agreement does not involve any corporate transaction — but naturally, the market will speculate whether this is not a first step towards a merger between the two companies at a challenging time in the real estate market.

The partnership is restricted to sharing registration data of ready-made properties that are for sale and properties available for lease on the platforms of the two companies.

In other words: the properties created by QuintoAndar, the startup by Gabriel Braga and André Penha, can be viewed on the Lopes platform — and vice versa.

The agreement includes a revenue share. If QuintoAndar originates a property, for example, but the sale ends up happening at Lopes, the two companies will share the revenue with the commission.

Lopes still does not have a projection of how much the partnership can add to sales, since the market is very cyclical and is going through a low moment with the Selic at 13.75%, construction costs at the top and more restrictive real estate credit , “but we believe that this type of partnership leverages the business and the members of the network,” Matheus Fabricio, the company’s IR officer, told the Brazil Journal. “It will certainly help us to have a better result than the market, gaining market share.”

Questioned whether the transaction could be a first step towards a merger, Matheus said that “there was not and there is no negotiation in that sense.”

“It’s just a commercial partnership, to favor the journey of the buyer and seller and increase the turnover of both companies.”

According to the executive, discussions about the partnership began in the middle of last year, even though the two companies already had a “harmonious” relationship before.

Matheus said that the macro context did not influence the decision to join forces, which had to do with the vision that the two companies share about the future of the market.

“The market has to be more collaborative, to make it easier for the buyer and the seller to transact and for brokers to be able to access the portfolio more easily. To a large extent, we have a similar vision, despite different strategies,” he said.

Initially, the partnership will last for one year and will be restricted to the metropolitan regions of São Paulo, Rio de Janeiro, Belo Horizonte and Porto Alegre.

The partnership will create one of the largest real estate banks in Brazil, with more than 400,000 properties listed — 250,000 by Lopes and 150,000 by QuintoAndar. The sites of the two companies receive 30 million hits per month.

According to Matheus, there is some overlap between the two bases, but relatively small.

“We don’t have that closed number yet, but we did different cuts and the overlap ranged from 10% to 25%,” he said. “We also realized that there is a great complementarity. QuintoAndar is far ahead in terms of leasing, but we have a lot more properties for sale and purchase. At the highest tickets, we are also stronger.”

The partnership comes at a time when Lopes shares are trading close to historic lows. The paper costs BRL 1.62 with the company worth BRL 240 million on B3.

QuintoAndar was valued at more than $5 billion in its last private round two years ago — a valuation that, given the shift in the VC market, would certainly not be repeated today.

Source: Brazil Journal