Vision Knight-backed Zhong Ao launches HK IPO
China-based property manager Zhong Ao Home Group, which received a pre-IPO investment from Vision Knight Capital earlier this year, is looking to raise up to HK$459.2 million ($59.2 million) through a Hong Kong offering.
The company plans to sell 224 million shares - including 24 million existing shares - at a price of up to HK$2.05 apiece. The selling shareholder is an entity ultimately controlled by the founders and senior management.
Vision Knight invested $20 million in the business in April - through its second China-focused fund and the parallel entrepreneurs fund - and holds an 11.25% interest. The other pre-IPO investor is E-House, a US-listed Chinese online real estate agency. It committed $12 million for a 6.75% stake, according to a filing.
Zhong Ao primarily provides management services for residential properties. As of September 2015, it had a total contracted gross floor area (GFA) of 33.7 million square meters across 164 properties, including a revenue-bearing GFA of 14.2 million sqm.
Earlier this year, the company entered the online-to-offline (O2O) space, launching the Aidaojia mobile app, which provides localized and personalized products and services to residents. These include a butler service that can make product recommendations and offer last-mile delivery. It had 36,200 registered users as of September, approximately 12,900 of whom had placed orders. In September alone, 36,000 orders were processed through the app.
Zhong Ao has entered into several partnerships to accelerate the growth of its O2O platform. E-House and Fangdd - which has received PE backing - are the real estate services partners, while online supermarket Yihaodian is a product supplier to the platform.
The company reported revenue of RMB361.2 million ($56.7 million) in 2014, up from RMB290.3 million the previous year. Net profit came to RMB55.9 million, up from RMB33.1 million in 2013.
Vision Knight closed its second fund at the hard cap of $550 million in April 2014 after just four months in the market. E-House is currently the subject of a take-private offer led by its chairman and CEO and Neil Shen, a board member and China head of Sequoia Capital.
Macquarie is sole sponsor for the Zhong Ao offering.
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