Chinese proptech firm Fangdd files for US IPO targeting $150 million

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Screenshot of Fangdd website. (Image credit: TechNode)
Screenshot of Fangdd website. (Image credit: TechNode)

Chinese online real estate marketplace Fangdd on Wednesday filed an initial public offering (IPO) with the US Securities and Exchange Commission, with plans to raise up to $150 million.

Why it matters: Fangdd’s IPO filing highlights the shifting Chinese tech landscape to business-facing from consumer-facing services in an effort to offset slowing rates of domestic consumption.

  • The White House is considering a possible ban on Chinese companies going public on US stock markets.
  • China’s residential property market is forecasted to be worth RMB 33.4 trillion (around $469.6 billion) in 2023, rising at a compound annual growth rate of 9.2% from 2018, according to market research institute Frost & Sullivan.
  • Technology is increasingly an important part of China’s massive residential property market with the rise of a series of proptech companies including Lianjia, Fang Holdings Limited, and 58.com.

Details: Fangdd expects to use the proceeds to enhance research and development capabilities, to invest in technology and sales, marketing, and branding, as well as for working capital and other general corporate purposes.

  • The company employs more than 911,000 registered real estate agents out of the approximately 2 million agents in China as of December 31, 2018, according to Frost & Sullivan.
  • The firm’s main revenue sources are commission-based transaction fees, revenue from innovation initiatives, and other value-added services, primarily in relation to transactions facilitated through its marketplace, according to its prospectus.
  • Fangdd’s revenue rose 55.4% year on year to RMB 1.6 billion in the second quarter of this year.

Context: Founded in 2011, the Shenzhen company provides SaaS-based solutions to real estate agents in China for managing customers, property listings, capital, and transaction data to solve the inefficiencies of traditional offline property agent services market.

  • Fangdd incorporated its variable interest entity (VIE) in March 2014—a measure that enables Chinese domestic entities to list offshore on international capital markets.