Chinese Property Marketplace Unicorn Fangdd Sets Terms For $105m IPO

Fangdd Network Group, a Chinese software as a service (SaaS)-enabled online real estate marketplace, has set the terms for its initial public offering (IPO) on the US stock market, with plans to raise up to $105 million at the midpoint of its proposed price range.

The Shenzhen-based company’s latest filing showed that it plans to offer 7 million American depositary shares (ADSs) at $13-15 apiece, with underwriters given the option to purchase an additional 1.05 million ADSs.

The amended target is lower than the $150-million target that the company set when it first filed to float its shares on the Nasdaq Global Market under the symbol “DUO.”

The price terms would give Fangdd a fully-diluted market value of $1.2 billion, were it to price in the middle, just five years after it incorporated its variable interest entity (VIE) in March 2014 – a measure that enables Chinese domestic entities to list offshore on international capital markets.

The company said it would become the first publicly-listed industry internet SaaS company in China if the listing pushes through.

Fangdd specialises in serving real estate agents in China. As of December last year, the company registered over 911,000 registered real estate agents on its platform or about 45 per cent of the country’s total number of agents. It competes with domestic players like Lianjia, New York-listed Fang Holdings Limited, 58.com, and Ke.com.

There, however, seems to be enough space for competition in China’s property market, which continues to expand. According to a Frost & Sullivan report, the country’s residential property market size in China is expected to reach 33.4 trillion yuan ($4.6 trillion) in 2023, rising at a compound annual growth rate (CAGR) of 9.2 per cent from 2018.

Fangdd’s main revenue sources include a base commission from transactions and revenue from innovation initiatives and other value-added services. Its revenue increased by 26.9 per cent from 1.8 billion yuan in 2017 to 2.3 billion yuan ($332.4 million) in 2018.

In September 2015, Fangdd raised $223 million in its Series C funding round backed by Chinese private equity firm Fountainvest Partners. The round elevates the company to unicorn status, with a valuation of $1.013 billion.

The company also secured $80 million in a Series B round from a group of Chinese investment firms including Vision Knight Capital China Fund, Lightspeed China Partners, and CDH Ventures in July 2014. In 2013, it raised 60 million yuan ($8.3 million) in a Series A round.

Fangdd said the proceeds from its IPO will be used to enhance research and product development capabilities; invest in technology; beef up sales, marketing and branding; and finance potential acquisitions.