PE-backed Fang.com spins out China property analytics business

A total of 63.4 million American Depository Shares (ADS) in the new entity – China Index Holdings – were sold to existing investors in Fang Holdings, the parent of Fang.com. IDG Capital owns 15.2% of the company’s class A shares, while General Atlantic and The Carlyle Group have 9.5% and 8.3%, respectively. Vincent Mo, Fang’s chairman, retains voting control through his class B shares.

A DPO raises capital by selling shares directly to the public, or in this case a defined group of investors. These offerings – pursued by Spotify among others – are cheaper to run than traditional IPOs because it eliminates intermediaries. The disclosure and reporting requirements are also less stringent. They tend to be favored by companies that are small or have an established investor base.

Fang Holdings, which was previously known as SouFun Holdings, listed on NASDAQ in 2010 and has a market capitalization of around $500 million. The company announced in 2015 that IDG and Carlyle would together invest $2.1 billion across two tranches. The capital was intended to support the transition from a pure information platform to a transaction-oriented model. As of March, IDG and Carlyle held stakes in Fang Holdings of 16.8% and 5.3%, respectively. General Atlantic had 10.5%.

Fang Holdings announced in January that it would spin off China Index Holdings. It said it was in the best interests of the company for its core offering – primarily marketing and listing services – to be run separately from the analytics business. More than three-quarters of Fang Holdings’ revenue in 2018 came from online property listings and related marketing services.

China Index Holdings claims to be the largest real estate information and analytics platform in China by geographical coverage and volume of data points. The foundation of its business is the China Real Estate Index System, a comprehensive set of benchmarks widely adopted by industry participants, according to a filing. Major clients include real estate developers, brokers, and financial institutions.

The company’s database encompassed detailed information of over 2,300 cities, 850,000 plots of land, 350,000 residential property projects and 45,000 commercial property projects in China as of December 2018. Revenue came to RMB421 million ($61.2 million) in 2018, up from RMB335 million a year earlier. Over the same period, net income rose from RMB128.2 million to RMB165.4 million.

Fang Holdings previously pursued a spin-out of its online media and finance service units through a backdoor listing in Shanghai in 2016. The effort was subsequently abandoned due to regulatory uncertainty around such practices.

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• Topics
• Greater China
• Real estate
• Technology
• IPO
• China
• The Carlyle Group
• General Atlantic
• IDG Capital Partners
• TMT