Carlyle backs Chinese apartment operator Anxin

The company previously received two tranches of Series A funding. The second, which was worth RMB70 million ($10 million) and closed in 2015, was led by Vision Knight Capital Partners. A Series B of RMB300 million followed in 2017, also in two parts, led by Qiming Venture Partners and Proprium Capital Partners, respectively. Vision Knight re-upped, while Yonghua Capital and Oriental Fortune Capital came in as new investors.

Carlyle is contributing capital from two funds: Carlyle Asia Growth Partners V, which had $300 million in assets as of September, having set a target of $1 billion; and Carlyle Beijing Partners Fund II, a renminbi-denominated vehicle.

Founded in 2014 and headquartered in Shanghai, Anxin operates more than 160 apartment complexes in 24 first and second-tier cities across China. It works under three brands: Happy Apartment, Cozy Apartment, and Reading Hotel. The company claims to provide employee housing solutions to approximately 2,000 corporate customers.

By focusing solely on the corporate market, Anxin differentiates itself from the bulk of China’s apartment rental platforms that cater to individuals, typically young professionals who rent because they can’t afford to buy. The most high-profile players in the space are Qingke and Danke, the former having gone public in the US in November and the latter looking to follow in its footsteps.

Both operate under a decentralized model, renting out apartments from individual property owners, rather than taking out leases on entire buildings. Substantial capital outlays are often required to cover renovation costs and prepayments to landlords, so discounts are offered to tenants who pay upfront. Several smaller players have gone bankrupt because they pursued scale rather than sustainability, paying landlords above the market rate and charging low rental fees to tenants.

However, there are signs that some operators are trying to encroach on Anxin’s territory. For example, last year Danke launched a centralized business line. It takes over buildings or entire floors and transforms them into dormitory-style apartments. These are marketed to corporate clients as accommodation for blue-collar workers.

David Wei, founding partner at Vision Knight, previously told AVCJ that he prefers this approach to others because the turnover rate isn’t as high and customer acquisition costs are lower. “Young, white-collar workers in China change jobs quite often and they have higher expectations in terms of living environment. It’s much easier to operate blue-collar apartments,” he said.

Dennis Wang, a managing director with Carlyle’s Asia buyout team, added in a statement: “The increasing number of workers in the service sectors moving to first-tier and second-tier cities in China has generated strong demand for well-run affordable housing solutions in these cities. With an experienced management team, a proven business model and solid operational know-how, Anxin is well-placed for further growth in this market.”

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Real estate
• Trade sale
• China
• The Carlyle Group
• IPO