China's Danke raises $130m in scaled back IPO
Chinese apartment rental platform Danke raised about $130 million in a smaller-than-expected US IPO that was primarily underwritten by existing private equity investors.
The company sold 9.6 million shares at $13.50 apiece, 5.4 million of which were purchased by existing backers Tiger Global Management, Joy Capital, and Ant Financial. There is an overallotment option of 1.4 million shares, which could lift proceeds to $149 million, according to a release.
This extension would still fall short of initial expectations, however. Danke had hoped to secure proceeds of $154-175 million by selling 10.6 million shares in a price range of $14.50-16.50. That target was set following a $190 million Series D round in October provided by CMC Capital Partners and Primarvera Capital Group.
CMC, Primavera and Joy each saw their holdings slightly diluted, with the three investors now holding 9.9%, 6.5%, and 15.6% stakes, respectively. Tiger, which led a $500 million Series C last year alongside Ant Financial, remains the largest institutional shareholder with 20%, while Ant has lifted its exposure from 7.8% to 8.7%.
Founded in 2015, Danke is one of the largest co-living platforms in China and claims to be the fastest-growing. Operations involve renting apartments sourced from individual property owners while leveraging a data-driven platform that provides services related to pricing, renovation work and connecting employees, landlords, residents, and third-party contractors.
Revenue improved 307% during 2018 to RMB2.67 billion ($390 million). For the first nine months of 2019, revenue was up 199% year on year to about RMB50 billion, with the company citing a 166-fold increase in the number of apartment units it controlled between 2016 and end-September 2019. This portfolio currently stands at about 406,750 units across ten cities in China.
Danke’s competitors include Shanghai-based Qingke, which raised $46 million in a smaller-than-expected US IPO in November. Qingke, whose investors include Morgan Stanley Private Equity Asia, Crescent Point and SAIF Partners, has raised $100 million since launch in 2012. This compares to around $850 million in private funding for Danke, pre-IPO.
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