China’s Danke Apartment shared housing platform files for US IPO

2 min read
(Image credit: Danke)

Chinese online residential rental marketplace Danke Apartment has filed an application with the US Securities and Exchange Commission for an initial public offering on the New York Stock market on Monday.

Why it matters: Despite tightening trade tensions, there have been a spate of Chinese tech companies filing applications for initial public offerings (IPO) on US markets in recent weeks. Chinese peer Qingke filed on Monday, making Danke the second Chinese apartment rental platform that has filed for an US listing this month.

  • Other Chinese tech firms that have piled on include NetEase education unit Youdao, Chinese audio platform Lizhi, and crypto mining equipment manufacturer Canaan Inc.
  • The IPO filing followed just a day after Danke announced a $190 million Series D led by China Media Capital and Primavera Capital.

Details: The company aims to raise up to $100 million in its IPO, a figure commonly used as a placeholder for IPO filings, and may change.

  • The proceeds will be used for market expansion, housing renovation, technology development, and branding, according to the company.
  • It now manages nearly 407,000 housing units in 13 major Chinese cities including Shanghai, Beijing, and Guangzhou, according to the prospects.
  • The company currently earns revenues primarily from rent and service fees. Its revenue jumped 198.8% to RMB 4.99 billion ($699.5 million) in the nine months ended Sept. 30, 2019 from RMB 1.67 billion in the same period a year earlier.
  • However, the firm is still loss-making, recording RMB 2.52 billion in net losses for the first nine months of 2019 due to high housing rental and marketing costs.
  • Citigroup Global Markets, Credit Suisse Securities, and JPMorgan Securities are the deal underwriters.

Chinese rental platform Qingke aims to raise $100 million in US IPO

Context: Founded in 2015, Danke rents shared houses targeting young professionals.

  • The company has closed six rounds of financing to date, raising nearly $900 million from top investors including Tiger Global management, Ant Financial, and Gaorong Capital, according to data from startup database Crunchbase.
  • Major players in China’s rental housing market have expanded rapidly and a series of scandals have arisen concerning data theft, hidden cameras, and elevated levels of formaldehyde in apartments.
  • Danke, along with other home rental agencies like 5i5j.com, were included in a government crackdown on fake or misleading listings.
  • Danke got a talent boost earlier this year when Gu Guodong, a key figure from Baidu’s core search unit, joined the company in June.