Why did Spark invest in a real estate site?

Despite its Ventures unit being subsumed into the main business with its latest restructure, Spark continues to throw a lot of stuff at the wall to see what will stick.

The telco's latest move is to up its stake in PropertyNZ (trading as Homes.co.nz) from 14% to 22%, making it the largest single shareholder in front of founder Jamie Kruger (18%).

Both sides have been schtum on the financials of the June 1 deal but a well-placed insider has leaked them to NBR: Spark put in another $2 million at a post-money valuation of $24m.

Spark is in good company. Other investors include NBR Rich Lister John Holdsworth's Evander Management (which includes various members of the Datacom founder's family, plus Datacom executive Robin Keall), as well as Kiwi Landing Pad chairman John Holt.

And industry observers say the deal is good for Homes.co.nz.

Alistair Helm, whose former roles include chief executive of Realestate.co.nz and head of product at Trade Me Property, says the deal will have given Homes.co.nz a "substantial" cash injection. But, more, the investment has given the site a credibility boost in the market.

While the privately held Homes won't reveal any financials, Mr Helm's analysis is that the company is already cashflow positive. He sees most of the new money going toward a sales effort — though he also notes the market is increasingly crowded, with Realestate.co.nz and Trade Me Property recently joined by One Roof.

But what's in it for Spark?

"We see alignments between Homes.co.nz and Spark’s ambition in two areas," spokeswoman Lucy Fullerton says.

"One is the way they have created a digital channel that helps Kiwis understand/manage the value of their largest asset, and the other is the way they have democratised data by making property data – particularly council sales records –easy to use."

Bear in mind another Spark side-project is Qrious, an outfit that crunches big data in a bid to make it useful for marketers and others.

Ms Fullerton adds, "We are also working together with Homes.co.nz on some exciting future services that will bring real benefits to our customers – we will have more on that in the next few months."

And one close watcher of the deal, who did not want to be named, told NBR "Spark at Home is a big strategy – finding places to be relevant around home – security, maintenance, home ownership and on. The Homes.co.nz investment is kind of a vector to there."

Mr Helm says, "The key issue is to what opportunity does Spark seek to leverage through this investment — having access to the insight into the market dynamics of 1.6m households in New Zealand would seem to be highly valuable and I suspect this will emerge in the coming years."

Exactly how, watchers have to see. It's hard to get a handle on Spark's various experimental plays. It says Lightbox has 300,000 users but won't say how many of them are paying customers and how many inhouse freebies. It has landed rights to the Rugby World Cup 2019 but says it won't reveal the cost until the end of its next financial year. And it has gone into home security with its Morepork line but won't tell NBR (or investors) how many have signed up.

Mr Kruger declined comment on the deal, citing confidentiality terms with Spark. 

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