CDPQ leads $150m round for China's Mofang Apartment
Mofang Apartment, a Chinese serviced apartment developer backed by Warburg Pincus, has raised a $150 million Series D round led by Caisse de dépôt et placement du Québec (CDPQ).
Based in Shanghai, Mofang operates more than 70,000 serviced apartments in 20 Chinese cities, targeting white-collar urban professionals with a high monthly income. The company claims to be China’s largest domestic apartment rental operator by number of operational properties.
Mofang was founded in 2006 and has raised several rounds of funding from private equity investors. Warburg Pincus has been the company’s most active backer: it participated in Mofang’s 2012 Series B round alongside DT Capital Partners, committed $140 million in a 2015 follow-on round, then contributed to a 2016 Series C round led by AVIC Trust. The new capital will be used to expand Mofang’s market presence and improve its operational capabilities.
“Having a well-known and reputable investor like CDPQ will help Mofang accelerate its development and further consolidate its leadership position,” said Joseph Gagnon, a managing director at Warburg Pincus, in a statement. “Warburg Pincus will continue to support Mofang’s future development through various means, including real estate financing and property resources.”
Warburg Pincus has made several large bets in recent years based on China’s growing demand for rental accommodation. In 2018 the firm joined a RMB4 billion ($621 million) round for Ziroom, a spin-out of real estate agency HomeLink that subleases apartments from individual owners, and joined Singapore’s GIC Private to establish a RMB4.3 billion platform to invest in urban rental apartments.
HomeLink projects that China’s apartment rental industry will grow from last year’s level of RMB1.1 trillion to MRB4.6 trillion by 2030, with young people making the largest contribution to demand. The government is also playing a part in the industry’s growth through recent measures to curb rising home prices by encouraging home rental rather than purchasing.
Rental companies tend to offer one of two basic service models: decentralized providers that sign up individual landlords, and centralized players in which the operator owns the entire building. The former is more costly but allows for rapid scaling, while the latter permits lower operating costs but at a slower pace of expansion.
Other players in the apartment rental space include Danke Apartment, an online platform that connects landlords with long-term rental tenants. Danke recently raised a $500 million Series C round led by Tiger Global Management and Ant Financial.
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