Alibaba injects Tmall Haofang into E-House as property industry follows retail sales in marching to the internet’s beat

E-House will pay HK$1.86 billion in shares for an 85 per cent stake in Tmall Haofang, and separately allot 132 million shares to Alibaba’s wholly owned unit Taobao China for HK$990 million

The deal boosts Alibaba’s stake in E-House to 22.6 per cent, from the previous 8.3 per cent as the second-largest shareholder

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A residential area in Beijing on 23 February 2021. Photo: EPA-EFE

Published: 2:27pm, 29 Apr 2021Updated: 4:41pm, 29 Apr 2021

Alibaba Group Holding, the world’s largest e-commerce platform, is injecting its online real estate sales platform into one of the country’s biggest property agencies, more than doubling its stake in E-House (China) Enterprise Holdings as the coronavirus pandemic accelerated the migration of retail sales to online marketplaces.

The e-commerce giant will inject its stake in its real estate marketplace Tmall Haofang into its partner E-House for shares. In turn, Alibaba will become the second-largest shareholder of E-House, whose shares are traded in Hong Kong. The exercise boosted E-House’s shares by as much as 13.4 per cent to an intraday high of HK$9.12 in an advancing market, before closing 0.5 per cent lower at HK$8.

E-House will pay HK$1.86 billion in shares for an 85 per cent stake in Tmall Haofang, and separately allot 132 million shares to Alibaba’s wholly owned unit Taobao China at HK$7.5 per share, or a total value of HK$990 million (US$128 million), according to a statement to the Hong Kong stock exchange. At the same time, E-House would allot 133.33 million shares to its chairman Zhou Xin, and issue 66.66 million shares to Yunfeng Financial Group Limited for the same price.

The restructuring of Alibaba’s sprawling investments follows the record US$2.8 billion fine on April 10, when the State Administration for Market Regulation (SAMR) found the internet giant in breach of China’s anti-monopoly regulations. Taobao and Tmall, the two mainstay online shopping and e-commerce platforms that form the foundation of Alibaba’s fortunes, have grown into the world’s largest marketplace for everything from agricultural products to cars and even real estate.

Zhou Xin, Executive Director and Chairman of E-House, attends the E-House (China) Enterprise Holdings Limited IPO press conference at the Four Seasons Hotel in Central on July 9, 2018. Photo: Winson Wong

China’s real estate developers such as Country Garden Holdings have shifted their sales of apartments, villas, and even commercial sites and foreclosed property to online platforms like Tmall Haofang, as showrooms were forced to shut during the coronavirus pandemic.