China classifieds site sees shares close up 42% on US debut
Chinese online marketplace 58.com – a classifieds website along the lines of Craigslist, backed by Warburg Pincus, SAIF Partners and DCM – saw its shares close up 42% on the first day of trading on the New York Stock Exchange. Coming in the wake of 58.com’s $187 million IPO, which priced above the expected range, the performance is likely to encourage other Chinese companies seeking US listings.
After opening on Thursday at $21.20, 58.com's stock reached a high of $26.61 before closing at $24.83. The 11 million American Depository Shares sold via the IPO were expected to price in the $13-15 range but the final price was set at $17 on the back of strong demand.
Founded in 2005, 58.com is a platform for classified ads for flat rental, recruitment, second hand goods and cars. Its services cover approximately 380 cities in China.
According to tech consultancy iResearch, 58.com was the industry leader with a 38.1% share in terms of cash receipts in China's online classifieds market in 2012. As of the second quarter of 2013, it had around 4.3 million active local merchants and an average of 129.7 million monthly unique visitors.
The company generates revenues primarily from memberships and online marketing services. A membership package comprises merchant certification, an online storefront display, preferential listing benefits and access to a customer service support team and online account management system.
58.com posted revenues of $10.7 million in 2010, $41.5 million in 2011 and $87.1 million in 2012. However, it recorded net losses in each of these years and only turned profitable in the first six months of 2013, with a net income of $300,000.
AVCJ Research shows SAIF initially invested $1 million in 58.com in 2006 and returned to put in an additional $5.77 million two years later. SAIF then re-upped in March 2010 with a $15 million round alongside DCM. DCM returned later that year to invest another $45 million together with Warburg Pincus.
Post-IPO, Warburg Pincus, SAIF and DCM currently hold stakes of 25.3%, 20.1% and 16.4%, respectively.
58.com is the third venture capital-backed Chinese company to go public in the US this year, following online retailer LightInTheBox, which raised $79 million in June, and Montage Technology Group, a semiconductor manufacturer that raised $71 million in September.
Sports lottery provider 500.com, app developer Sungy Mobile and travel website Qunar are among those currently working towards US listings.
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