IDG, Carlyle invest $1b in China's SouFun Holdings
IDG Capital Partners and the Carlyle Group are investing $1 billion in Beijing-based online real estate portal SouFun Holdings alongside the company's management.
According to information disclosed in the firm's second quarter results, half of this investment will take the form of convertible notes. Under the terms of the memorandum of understanding, the new Class A ordinary shares are priced at $7.45 per current American Depository Share (ADS), representing a 3% premium to the volume-weighted average trading price of the ADS for 20 days preceding August 6. The notes will bear a 1.5% annual interest rate, and a conversion price of $9.13 per share, a 22.5% premium on the stock purchase price.
In a statement, SouFun Chairman and CEO Vincent Mo said the funds will be used in the company's planned transition from an information platform into a transaction-oriented model. The company will expand into new cities, develop its technology and build up its team.
According to the firm's latest results, revenue for the first half of the year increased by 15.5% year-on-year to $334.3 million. However, net income for the same period decreased by 79.7% to $22.3 million. Fully diluted earnings per ADS decreased by 80% year-on-year to $0.05. Shares in SouFun closed down 5.67% on Friday to $6.99. The NYSE Composite Index was down 0.34%.
SouFun was founded in 1999 and acquired by Australia's Telstra International Holdings in 2006. Telstar later sold its entire stake in SouFun's 2010 IPO, when it raised $124 million on the NYSE. Apax Partners and General Atlantic each took a 19% stake for $163 million at that time as well.
IDG has made a number of investments in China's online sector recently. Last month the firm participated along with DCM and Northern Light Venture Capital in a $100 million Series D round for cloud-based mobile business management application Fxiaoke.com. IDG also backed a take-private bid for online game developer KongZhong.
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