Chinese real estate platform Beike pursues US IPO   

The entity to be listed comprises Lianjia, China's leading real estate brokerage, and Beike, an online-to-offline platform through which buyers can identify properties and initiate transactions. Beike was established in 2018 by Hui Zuo, who also founded Lianjia.

Beike has built an agent cooperation network (ACN) that is integrated with Lianjia. Based on the multiple listing service popularized in the US, it allows multiple agents to collaborate on individual deals. This means agents can pursue a higher volume of transactions, leading to more opportunities in the long run. 

As of June, Beike had 265 real estate brokerage brands, 42,000 community-centric stores, and more than 456,000 agents across 103 cities in China. It generated a gross transaction value (GTV) of RMB2128 billion ($300.5 billion) in 2019, facilitating over 2.2 million sales. This makes Beike the second-largest commerce platform across all industries in China, after Alibaba Group, according to China Insights Consultancy (CIC).

The company also cooperates with Ziroom, an apartment rental operator that spun out from Lianjia and has since raised several rounds of private funding. Ziroom is also controlled by Zuo.

Zuo said that Beike has set industry standards for service protocols and digital infrastructure. “We digitalized the scattered offline data to bring the entire process of housing transactions online, which transforms not only the transaction process but also the post-transaction phase, such as mortgage and title clearance,” he explained in a filing.

Beike generates most of its revenue from sales commissions and service fees. Revenue rose 60.6% year-on-year to RMB46 billion in 2019. It came to RMB7.1 billion in the first three months of 2020, down 12.7%. This was because of reduced home buying activity during the COVID-19 pandemic. The company's net loss widened from RMB427.7 million in 2018 to RMB2.18 billion last year. It was RMB1.23 billion in the first quarter of 2020.

China's housing market was the largest in the world by GTV and number of transactions in 2019, according to CIC. GTV is expected to rise from RMB8.4 trillion last year to RMB15.1 trillion by 2024. Over the same period, property sales and rentals handled by real estate brokers are projected to increase from RMB10.5 trillion to RMB19.1 trillion.

Last December, Fangdd, one of Lianjia's major rivals, raised $78 million through a US IPO, having reduced the size of its offering.

Tencent is the largest external shareholder in Beike with a 12.3% interest prior to the IPO, while SoftBank and Hillhouse own 10.2% and 5.3%, respectively. Huaxing Growth Capital has 3.8%.

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• Topics
• Greater China
• IPO
• Consumer
• China
• Hillhouse Capital Management
• Tencent
• China Renaissance
• Softbank