Goldman Sachs-backed co-working provider Atlas on Friday announced that it has completed a new round of financing which values the Guangzhou-based firm at HK$6.8 billion ($871 million) following completion of the investment.
The flexible workplace provider founded by Chen Sze Long, the son of Agile Property chairman Chen Zhuolin, didn’t disclose the amount of money raised in the latest round, which was led by Guangzhou R&F Properties chairman and co-founder Li Sze Lim alongside mainland builders Star River and Times China, according to a statement by the company.
Atlas, which has opened 11 locations in major cities in mainland China as well as Hong Kong since being founded 16 months ago, said the A2 financing round will provide it with the resources necessary to establish a footprint surpassing five million square feet (464,515 square metres) of gross floor area by the end of the first half of next year.
Atlas Supported by Guangdong Comrades
Like the elder Chen’s Hong Kong-listed property firm, and Li Sze Lim’s R&F, the latest investors in Atlas, Star River Group and Times China Group, are both Guangdong-based real estate developers.
Hong Kong-listed Times China was the mainland’s 34th largest property firm in terms of sales in the first half of 2018, while Star River ranked 87th in sales over the same period. Atlas said the investment from the real estate companies would provide it with new resources and support its future development.
This round of investment in Atlas, which was founded in June 2017, comes after the company completed its second financing round in January of this year, when it received an unspecified investment from Goldman Sachs and PAG Real Estate.
Competition in what’s quickly becoming a global battle for domination of the shared office market have been heating up in recent months, culminating in reports last week that Softbank is in talks with flexible office sector leader WeWork to invest up to $20 billion in the New York-based company in return for a controlling stake in the venture.
Atlas Woos Landlords as It Grows Footprint
The co-working startup entered Hong Kong in August of this year by opening its first location in the Sun Life Tower at Harbour City in Tsim Sha Tsui. In that Kowloon location the mainland co-working operator leased around 50,000 square feet of waterfront space in the grade A office building.
As seeks to expand in increasingly crowded markets in Hong Kong and the mainland, Atlas is pitching its facilities to landlords as a boost to their businesses. “Atlas’ diversified products and service offerings are able to widen the revenue channels and shorten the payback period of office building assets, which increase the asset value and differentiate the buildings from others alike in the CBD market – a unique solution to the ever increasing office supply,” Atlas said in its latest statement.
Mainland Co-Working Market Could Hit RMB 231B in 2020
Mainland China, as one of the largest battlegrounds for co-working space providers in the world, hosted a total of 6,000 locations offered by 300 different flexible office providers by the end of June this year, according to a recent market study. The total gross floor area of flexible working space covered some 12 million square metres, which converts into two million desks to accommodate startups, small businesses and corporate teams.
The Chinese Academy of Industry Economic Research, a government research bureau headquartered in Beijing, predicts that the market value of flexible office space in China will reach RMB 61 billion in 2018, up by 160 percent from the RMB 23.5 billion reported for 2017. The research institute predicts that the market value of the industry will soar to RMB 231.5 billion in 2020.