Easyhome seeks Shenzhen listing through $5.5b reverse merger

Wuhan-based Zhongnan Commercial Group, a commercial property developer, will acquire 100% of Easyhome and issue 6 billion shares to the owners of the target company - which include several PE investors - at RMB6.18 apiece. This represents a 16.4% discount to Zhongnan Commercial's closing price on January 24, the day the transaction was announced, according to a filing.

Linpeng Wang, the president of Easyhome, will become the ultimate owner of the listed entity. He will hold a 61.44% stake, comprising directly owned shares and an interest held by Easyhome, which he controls. Alibaba Group will own 9.6%, while Yunfeng Capital and Taikang Group will hold 4.8% and 3.8%, respectively. Sequoia Capital China, Boyu Capital, and JD Capital will have smaller stakes.

These investors were part of a consortium that pumped RMB13 billion into the retailer in February of last year for a 36% interest. Alibaba put down RMB5.45 billion for a 15% stake while Beijing Harvest Capital committed RMB1.45 billion.

Founded in 1999, Easyhome operates 223 home furnishing stores in 29 provinces, with annual sales of more than RMB60 billion. In addition to selling furniture and building materials, it provides home design and refurbishment services. The company reported RMB7.35 billion in revenue for 2017.

There have been numerous reverse mergers on China’s domestic markets in recent years that have delivered liquidity events to private equity investors. Several involved companies that were previously listed in the US. Qihoo 360 relisted in Shanghai through an RMB50.4 billion reverse merger in February last year. This followed similar deals for Focus Media and Giant Interactive Group in Shenzhen.

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• Topics
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• Alibaba Group
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• Yunfeng Capital
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• Sequoia Capital