Lianjia (AKA, Homelink), one of China’s largest real-estate brokerages, is planning to raise about $2 billion U.S. from investors including tech giant Tencent Holdings Ltd. and private-equity firm Warburg Pincus LLC, according to the Wall Street Journal.
Tencent is investing $1 billion U.S., while private-equity firm Warburg Pincus is putting in $500 million U.S.. The company plans to use the funds to expand recently-launched open platform real estate listings provider, Ke.com.
Tencent’s participation will raise eyebrows at 58.com (NYSE: WUBA), which views Ke.com as a direct competitor to its own market-leading listings platform, Anjuke. Tencent holds a 20 percent stake in 58.com. Although 58.com has been dismissive of Ke.com at times recently, $2 billion U.S. in fresh investment sets up the newcomer as a challenger that can no longer be ignored.
The private fundraising round is likely to value Beijing-based Lianjia at about $13 billion U.S. (Wall Street Journal). The company was previously valued at closer to $6 billion U.S. (or 51.4 times its net profit for 2015) following investments of 2.6 billion and 3 billion RMB from property development giants Sunac China and China Vanke, respectively, in January and April 2017.
Lianjia was founded in 2001 and has scores of brick-and-mortar branches in Beijing, Shangha, and other Chinese cities. It has three independent business entities, brokerage brand Lianjia, listings brands Ke.com and affiliate agency management brand, Deyou (德佑地产).
China’s real-estate market has surged in recent years, especially in the country’s largest cities. Property investment, housing sales and new construction picked up this summer, and rising incomes among the country’s middle class have helped bolster home prices.
Residential property sales in China totaled 6.6 trillion RMB ($964.26 billion U.S.) in the first seven months of the year — up 16 percent from the same period in 2017, according to China’s National Bureau of Statistics.