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Domain set to acquire Insight Data Solutions

Domain has entered into a binding agreement to acquire Insight Data Solutions (IDS) by October this year, marking another step forward in the execution of its marketplace strategy.

Domain aims to expand its addressable market beyond agents and consumers to financial institutions and governments.

The acquisition of IDS establishes Domain as a provider of land and property valuation, insights and analytics services in the government sector.

The acquisition is set to be completed in October, where the amount payable is $60 million in cash, with additional contingent payments after this date to June 2027.

IDS is anticipated to deliver on-target revenue of $7 million during the 2022 financial year, before the impact of any operating synergies.

Domain Chief Executive Officer Jason Pellegrino said the acquisition would significantly expand the size of the Property Data Solutions pillar of Domain’s marketplace strategy.

“We are pleased to welcome IDS to the Domain Group,” Mr Pellegrino said.

“IDS brings rich experience in building property data platforms and delivery services to support the workflow requirements of governments, particularly in regards to land valuations.

“Federal, state and local governments will always play a central role in Australia’s property eco-system.

“IDS’ platforms, workflow tools and property analytics allow governments to make more timely, accurate and nuanced decisions regarding land valuations, land use, tax policy, and revenues.

“The importance of these services is likely to amplify as governments deal with increased land scarcity, the challenges of housing affordability and planning policy, increased infrastructure investment and the transition of revenue from transfer duties to annual lies based on land valuation.”

Established in 2013, IDS is a market-leading property data business focused on two customer segments: government and corporate.

IDS’ platform and workflow tools connect many of the key stakeholders in the property ecosystem:

  • Officer of the Valuator General (VG) who is responsible for statutory valuation processes.
  • Local Government Authorities (LGAs) that levy rates based on these valuations.
  • Valuers who perform the statutory valuations.
  • The public whose rates are based on the statutory valuation.

In the government segment, IDS’ ‘VM Online’ is the leading private statutory valuation workflow platform to scale in Australia.

It manages 28 per cent of national statutory valuation volume, with leading positions in Victoria and Adelaide city.

The vast majority of remaining valuation volumes are managed in-house by state VGGs and LGAs.

In the corporate sector, IDS has a bank-grade Automated Valuation Model product suite and its valuation models are in use by smaller lenders, fintechs and mortgage brokers.

As part of the transaction, the IDS founders, Louie Psaroulis, Mike Thanos and Chris Spanos, will remain with the business to continue to drive the IDS strategy.

“IDS is a strong standalone business and a great addition to our Property Data Solutions pillar. Through the acquisition, we can support IDS to keep innovating and expanding into new markets and geographies.”

Mr Psaroulis and Mr Thanos added they were excited the business had joined “an organisation of Domain’s calibre and capacity”.

“Domain’s unique data assets and extensive industry reach will enable us to accelerate the evolution of our product offerings to Government and corporate customers,” they said in a joint statement.

“IDS and Domain are a natural fit with a shared vision to deliver leading property data and analytics to the Australian market. We look forward to working closely with their leadership team.”

Terms of the acquisition

Under the terms of the signed agreement, Domain Group will acquire 100 per cent of the securities in Insight Data Solutions Holdings Pty Ltd. Completion is anticipated to occur in mid-October this year.

The consideration payable at completion is $60 million in cash. Additional contingent consideration is payable in tranches over the performance period between completion and June 2027.

Payment of each tranche of contingent consideration is triggered by the achievement of commercial and financial outcomes of the IDS business relating to securing and delivering services under new customer contracts.

There is a minimum cash component to each tranche of contingent consideration, however, the majority of the contingent consideration may be satisfied in either cash or Domain shares.

The total consideration (including the completion payment) for on-target performance over the performance period by IDS is $140 million and the maximum consideration payable in the event of over-performance by IDS is $159 million.

IDS is anticipated to deliver on-target FY22 revenue of $7 million before the impact of any operating synergies.

Over the next five years, on-target performance would see IDS executing on identified growth opportunities to deliver a greater than four-fold increase in total revenue in FY26.

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