Mingtiandi

Asia real estate and outbound investment news

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
Sign Up / Login Logout

Lost your password?
Register
Forgotten Password
Cancel

Register For This Site

A password will be e-mailed to you.

  • Capital Markets
  • Events
    • Mingtiandi 2023 Event Calendar
    • Mingtiandi APAC Residential Forum 2023
    • Mingtiandi Asia Logistics Forum 2023
    • Mingtiandi Hong Kong Focus Forum 2023
    • Mingtiandi APAC Data Centre Forum 2023
    • Mingtiandi Asia Office Strategies Forum 2023
    • Mingtiandi Singapore Focus Forum 2023
    • More Events
  • MTD TV
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail
  • Research & Policy
  • Advertise

SoftBank-Backed Beike Aims for $1B NYSE IPO

2020/08/02 by Diana Li Leave a Comment

lianjia

Beike is a spin-off from Beijing’s Lianjia

China’s largest property listings website, Beike, is attempting a $1 billion IPO on the New York Stock Exchange despite signs that stock markets are becoming part of growing tensions between the US and mainland China.

On July 24, KE Holdings Inc (BEKE), a Chinese online property brokerage backed by SoftBank Group Corp, submitted its prospectus to the US Securities and Exchange Commission, aiming for what would be the largest US listing of a Chinese company in more than two years.

The initial public offering application comes as a number of Chinese companies are retreating from US markets in favour of listings in Hong Kong or on mainland exchanges with the US senate having passed a bill in May that could ban many Chinese companies from listing shares in the country. 

Leveraging China’s Boom

“We have more than 18 years of operating experience through Lianjia since our inception in 2001, Beike founder and chairman Zuo Hui said in an open letter to investors, “Such extensive industry experience has provided us with distinct insights into markets, business conditions and customer needs, which we believe are critical for us to offer effective and practical solutions.”

beike-zuo-hui

Beike boss Zuo Hui is aiming for a $1 bil listing

The Zillow-like real estate platform commenced operations in 2001 through Beijing Lianjia, a Beijing-based real estate brokerage which operates over 42,000 agency locations across 103 mainland cities.

Beike recorded 2.2 million transactions and about 39 million mobile monthly active users in 2019, allowing it to handle a gross transaction value of about RMB 2.1 trillion ($300 billion).

Goldman Sachs, J.P. Morgan, Morgan Stanley and China Renaissance are acting as underwriters for the listing, according to the prospectus. In March 2020, Beike was reported to have raised $2.4 billion in a Series D+ round from investors including SoftBank, Tencent, Hillhouse Capital, and Sequoia Capital China.

The investment banking giants are betting that Beike’s role in facilitating China’s housing market, which reached RMB 22.3 trillion in value in 2019, according to a report by mainland sovereign wealth fund CIC, will attract share shoppers to the offering. Mainland home sales are expected to grow at a compound annual growth rate of 6.6 percent to reach RMB 30.7 trillion in value by 2024.

Fraud Cases Shock Investors

Beike’s US IPO application comes at a turbulent time, after financial fraud allegations rocked three Chinese companies listed in the US earlier this year.

In April, NASDAQ-listed Luckin Coffee was found to have fabricated $310 million in sales, a fraud which triggered its delisting from the US exchange. Days later, NYSE-listed TAL Education Group lost 18 percent of its value after the tutoring marketplace also admitted fraudulent sales.

During that same week short-sellers Muddy Waters and Wolfpack accused NASDAQ-listed video-streaming site iQiyi of fraud, a claim that the Baidu-spinoff has denied.

Earlier this year, loss-making mainland apartment rental platforms, Qingke and Danke, both of which are listed in the US, were investigated by local governments in China after coming under fire from tenants and landlords.

Those scandals have led some investors to question Beike’s listing plan under the current environment. Brock Silvers, CIO of Adamas Asset Management in Hong Kong, points to financial considerations as a possible rationale for choosing a US exchange.

“There’s no question that Beijing now prefers for Chinese companies to seek local listings, but that influence can vary from case to case,” Silvers told Mingtiandi.  “Not all companies are ready to preemptively leave US capital markets. Founders will also likely remain intrigued by the ability to move significant personal wealth overseas.”

While Beike’s current investors may prefer a US listing, Silvers pointed out that current conditions are creating headwinds for the $1 billion deal. “Given the recent problems are Danke and Qingke, as well as the rapidly deteriorating US-Sino bilateral relationship, a Beike IPO in the US this year is far from assured,” he said.

US-China Tensions Spill into Stock Markets

With the accounting scandals helping to stoke cross border tensions and raise investor concerns over financial transparency, the US Senate on 20 May passed the Holding Foreign Companies Accountable Act, which requires certain issuers of securities to establish that they are not owned or controlled by a foreign government. The bill has yet to come to a vote in the House of Representatives.

Even before the US government began voting on new restrictions, a number of US-listed Chinese companies had opted for secondary listings in Hong Kong.

Gaming company NetEase and e-commerce giant JD.com, both NASDAQ-listed, chose to debut in Hong Kong last month, with NetEase raising $2.7 billion and JD raising $3.9 billion in the second-largest IPO of the year so far.

Beijing’s Financial Supervision and Administration, which licenses commercial operations, announced late last month that it will analyze Chinese companies listed in the US and support companies seeking to return home to Hong Kong or mainland China exchanges, according to local media reports.

Bracing for Risk

In its prospectus, Ke Holdings focused on market risks over political concerns.

“Our business is susceptible to fluctuations in China’s residential real estate market and is subject to government regulations,” the company said in its prospectus.

During 2020 the mainland housing market has gone from a COVID-19 shutdown which wiped out most of the first quarter to an easy credit boom which has seen home sales and land tenders jump in recent months.

The Housing and Construction Bureau in Shenzhen earlier this month announced a set of new home purchase restrictions designed to cool down the market after home sales in the city jumped 41 percent in the first half of 2020.

Those cooling measures came after Beike’s revenue for the first quarter of 2020 fell to RMB 7.1 billion — a 12.7 percent drop from the same period last year as lockdowns kept home buyers indoors

Share this now

  • LinkedIn
  • Share
  • Tweet
  • Email

Filed Under: Finance Tagged With: Beike Zhaofang, daily-sp, Featured, IPO, Lianjia, Softbank

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Mingtiandi Delivered

MTD TV

Greystar Nears First Closing of $1B APAC Multi-family Venture: MTD TV
Raymond Poh SDAX
Ex-JP Morgan Exec Sees Blockchain Democratising Private Real Estate

More MTD TV Videos>>

People in the News

Nicholas Toh, group chief executive officer of DCI Data Centers
Nicholas Toh Takes Over as Group CEO at DCI Data Centers
Charles Griffith Macquarie
Asia Real Estate People in the News 2022-02-06
Kelvin Chan CBRE
CBRE Hires Kelvin Chan as Head of Capital Markets for China
Yoshinaga Takahashi PDG
PDG Hires Mitsui’s Yoshinaga Takahashi as Managing Director of Japan

More Industry Professionals>>

People in the News

Nicholas Toh Takes Over as Group CEO at DCI Data Centers

Nicholas Toh, group chief executive officer of DCI Data Centers

DCI Data Centers, an arm of Brookfield Infrastructure, has tapped Nicholas Toh to serve as group chief executive … Read More>>

Asia Real Estate People in the News 2022-02-06

Charles Griffith Macquarie

Finance giants lead this week’s collection of personnel moves on Mingtiandi as two of Asia Pacific’s largest financial … Read More>>

CBRE Hires Kelvin Chan as Head of Capital Markets for China

Kelvin Chan CBRE

CBRE on Friday announced the appointment of Kelvin Chan as the global property consultancy’s head of capital markets for … Read More>>

PDG Hires Mitsui’s Yoshinaga Takahashi as Managing Director of Japan

Yoshinaga Takahashi PDG

Princeton Digital Group has appointed Yoshinaga Takahashi as managing director of Japan, where he will help execute the … Read More>>

More Industry Professionals>>

Latest Stories

Raymond Lawler_Hines Asia-Pacific CEO
Hines to Build $1B Mixed-Use Complex in South Korea’s Busan
Boustead Singapore chairman Wong Fong Fui
Boustead Singapore Offers $213M Buyout of Property and Engineering Division
Tan Yew Chin CapitaLand Development
CapitaLand to Redevelop Singapore’s JCube Mall Into 40-Storey Residential Project

Sponsored Features

How Data Leadership Can Prepare Real Estate Companies for Big Data and AI in 2023
OpenSpace Capture
OpenSpace Capture Provides On-the-Ground Eyes at US Government Building Projects
Malls and Megaprojects from Hong Kong to Beijing Triumph at PropertyGuru Awards Show

More Sponsored Features>>

Connect with Mingtiandi

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Real Estate News

  • Capital Markets
  • 2022 Event Calendar
  • MTD TV Archives
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail

More Mingtiandi

  • About Mingtiandi
  • Contact Mingtiandi
  • Mingtiandi Membership
  • Newsletter Subscription
  • Advertise
  • Terms of Use
  • Privacy
  • Join the Mingtiandi Team


© 2007-2023 China Advertising Media Ltd (Samoa). All rights reserved.

  • This field is for validation purposes and should be left unchanged.