Chinese real estate services firm E-House seeks up to US$727 million in Hong Kong IPO

PUBLISHED : Tuesday, 10 July, 2018, 8:00am
UPDATED : Tuesday, 10 July, 2018, 9:18am

E-House (China) Enterprise Holdings, one of the country’s biggest real estate services firms, is seeking up to US$727 million in its initial public offering in Hong Kong after delisting from New York two years ago.

The company indicated a price range of HK$14.28 and HK$17.68 per share, with 322.8 million shares to be issued in total, according to a filing to the Hong Kong stock exchange.

Cornerstone investors include subsidiaries of e-commerce juggernaut Alibaba Group, Chinese state-owned developer Overseas Chinese Town (Asia), and the Singapore-based property and hotel conglomerate City Developments. A company owned by Henderson Land Development’s vice-chairman Peter Lee Ka-kit is also a cornerstone investor.

Alibaba is the parent company of the South China Morning Post.

The public offering comes nearly two years after the company went private, unwinding its listing on the New York Stock Exchange in August 2016. Ahead of that delisting, the company spun-off two units to be listed separately in New York, namely Leju, which focuses on online real estate services, and Jupai, a wealth management service provider.

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“The company that delisted from the United States in 2016 is not the same company that is going public now,” said Cheng Li-lan, an executive director of E-House. “We have many business segments, and a major reason for the delisting is to allow different segments to adopt different capital market strategies.”

The company will consider spinning off and listing other segments focusing on community services when the timing is right, company chairman Zhou Xin said.

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The listing will add to a strong IPO run in Hong Kong this year after the city’s bourses topped global rankings with an estimated HK$50.2 billion in funds raised in the first half, according to accounting and consulting firm EY.

A total of 26 Chinese property developers have stakes in E-House, including the top three developers by sales – Country Garden, China Vanke, and China Evergrande Group.

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E-House is the largest real estate agency in China’s primary market by revenue and the number of cities covered, according to property consultancy Cushman & Wakefield. It generated 3.9 billion yuan of revenue by promoting and selling residential projects in 186 cities last year, up 10 per cent from 2016.

The company operates China’s second largest real estate brokerage network with 7,051 stores. It is also the largest property data provider in the country by the number of cities covered, according to Cushman & Wakefield.

E-House’s net profit stood at 152 million yuan in the first three months of 2018, rising 13 per cent from the same period last year. Net profit in 2017 totalled 765 million yuan, up from 572 million yuan in 2016, and 177 million in 2015.

The company plans to use 50 per cent of the funds raised to expand into more cities and 28 per cent to upgrade its real estate data system.

The company’s shares will begin trading on July 20 in Hong Kong.

China International Capital Corporation (CICC) and Credit Suisse are joint sponsors of the listing.