China’s 58.com buys stake in VC-backed rival Ganji

Shareholders in Falcon View Technology, Ganji's parent company, will receive $412.2 million in cash and 34 million newly issued shares in 58.com, valued at $1.19 billion based on the most recent closing price. Shares in 58.com have climbed 30% in the past five trading days after the Financial Times reported that the two companies would merge.

The pricing of the deal suggests that Ganji is worth in the region of $3.7 billion. Last year the company received $200 million from The Carlyle Group and Tiger Global Management, while previous investors include BlueRun Ventures, Nokia Growth Partners (NGP), Capital Today, Sequoia Capital and CITIC Private Equity.

NGP has announced it will sell its stake - in what will be the firm's largest exit to date - but it is unclear how many others are following suit.

In parallel to the investment, 58.com has also received additional funding from Tencent Holdings. The Chinese internet giant has agreed to buy $400 million of newly issued shares at $52 per American Depository Share, taking its stake in the company to 25.1%. Tencent paid $736 million for 19.9% of 58.com in July 2014 and said the two companies would use each other as the preferred partner in local services and work together in building out online-to-offline services (O20).

This came eight months after 58.com went public, raising $187 million. Some of the proceeds of Tencent's investment were earmarked to buy shares from pre-IPO shareholders. SAIF Partners, DCM and Warburg Pincus were the company's VC backers. As of April 2014 - a couple of months before Tencent's entry - they held stakes of 14.7%, 13.5% and 17.9%, respectively.

Ganji and 58.com will continue to operate their own brands, websites and teams, while seeking out synergies and collaborating on expansion opportunities.

"Both Ganji and 58.com are leading players in the online classified market and have developed unique capabilities in O2O. Personally and on behalf of Ganji, I look forward to taking advantage of the great chemistry between Ganji and 58.com, and leveraging our respective resources and advantages. We have seen and continue to see the mobile internet enabling a transformative opportunity in the classified industry and across O2O categories," Mark Yang, chairman and CEO of Ganji, said in a statement.

Established in 2005, Ganji provides classified ads across different service categories, including job recruitment, housing and local services, to over 350 cities in China. It has also moved into the O2O space, launching a dedicated used-car O2O platform last year.

Often described as a Chinese version of Craigslist, 58.com claims to be China's largest online marketplace that connects local merchants to consumers. Revenue - primarily derived from memberships and online marketing services - came to $145.7 million in 2013, up from $87.1 million in 2012. 58.com first turned profitable in 2013, generating net income of $19.6 million.

The company's consolidation drive saw the acquisition of online real estate listing platform Anjuke last month for $267 million. However, Tencent inevitably draws more attention within this context, and the ongoing battle between China's largest internet companies to tie up different segments.

Tencent was the largest investor in an $850 million round for listings and group-buying service Dianping earlier this month. In March, rival platform Meituan, which is backed by Alibaba Group, raised a $700 million round. Meanwhile, the taxi-booking space has already seen a unification of the two leading players as Didi Dache and Kuaidi Dache - which have a string of third-party investors, although the former is backed by Tencent and the latter by Alibaba - announced plans to merge.

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

• Topics
• Venture
• Greater China
• Expansion
• Consumer
• Technology
• Exits
• TMT
• Consumer
• Growth capital
• Exit
• Trade sale
• Venture
• China
• Tencent