Chinese online property marketplace set for IPO
Fangdd Network, a Chinese online real estate marketplace backed by the likes of FountainVest Partners and CDH Investments, has filed to list in the US.
FountainVest is the largest external shareholder in the company with an 8.2% stake in the company, according to a prospectus. Vision Knight Capital, Lightspeed China Partners, and CDH own 5.7%, 3.3% and 7.7% respectively.
Fountainvest led a $223 million Series C round in September 2015; this followed an $80 million Series B in 2014 led by Vision Knight and featuring Lightspeed and CDH. CDH - participating through its venture funds, which have since been replaced by a venture-growth strategy - provided RMB50 million ($7 million) in Series A funding in 2013.
Established in 2011, Fangdd initially served as a listings portal for leading property developers such as China Vanke, China Poly Group, and Greenland Holding to reach out to customers and penetrate lower-tier cities. It offered group buying discounts on new properties, among other promotions. In 2015, a new business line was launched, focusing on direct sales in the secondary market. The aim was to connect buyers and sellers directly, removing the middlemen.
As of June 2019, Fangdd had 131 million properties in its database, covering homes listed for sale or for rent as well as those not currently on the market. Its competitors include Lianjia, Anjuke and US-listed Fang.com.
The business is built around a network of real estate agents that exceeded 911,000 as of the end of last year, which is said to represent a market penetration rate of 45%. Agents open virtual shops in Fangdd’s marketplace under unique profiles. Based on actual performance and user ratings, the company helps agents establish credibility and brand value, match them with the most relevant property listings, buyers, sellers and tenants.
The main revenue source is base commissions from transactions. In 2018, the company generated RMB2.3 billion in revenue, up 26.9% year-on-year. For the six months ended June, it grew 55.4% to RMB1.6 billion. Net income reached RMB104 million in 2018, up from RMB600,000 in 2017. This compares to a net loss of RMB332.1 million in 2016.
The size and pricing of the offering have yet to be set.
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