Chinese online construction and interior design firm Qeeka to raise up to US$278 million in Hong Kong IPO

Shanghai-headquartered company to offer 242.03 million shares comprising international tranche of 90pc and Hong Kong tranche of 10pc

PUBLISHED : Tuesday, 19 June, 2018, 8:33pm
UPDATED : Wednesday, 20 June, 2018, 10:01am

Qeeka Home (Cayman), China’s largest online construction and interior design company, has applied to list on the main board of the Hong Kong stock exchange, with the aim of raising up to HK$2.18 billion (US$278 million) in an initial public offering.

According to its preliminary offering circular, Qeeka will offer 242.03 million shares comprising an international tranche of 90 per cent and a Hong Kong tranche of 10 per cent. This will bring the total number of shares issued to 419.51 million, or 467.91 million if the 15 per cent over allotment option is exercised in full. It’s indicative offer price will range between HK$6.80 and HK$9 per share.

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Zhejiang Meida Industrial, a Shenzhen-listed kitchen products maker, and Sea Wise Holdings, a Hong Kong investment holding wholly owned by Xia Ding, who is chairman of Zhejiang Meida, are cornerstone investors with a combined total of 33.78 million shares at HK$7.90 per share.

The deadline for subscriptions is June 26, and the final price will be set on June 27, with trading starting on July 5. The IPO sponsors are CLSA and Goldman Sachs.

Proceeds from the flotation will be used for the development of Qeeka’s online platform, investment in technology infrastructure and for making strategic investments and acquisitions.

The Shanghai-headquartered company controls its China operations mainly through contractual arrangements with wholly foreign-owned and Shanghai Qijia, and has gone through three rounds of pre-IPO fundraising. The series A investors included Baidu HK, Cowin, Hua Yuan international, Guangfa Xinde Capital and Qianrong Capital. The series B investors were Orchid Asia, Jianxin Capital, Seagull and SIP Oriza. Series C was Cachet Special.

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The company reported 141.41 million yuan, 300.85 million yuan and 479.06 million yuan in revenue in 2015, 2016 and 2017, respectively. But it also reported operating losses of 162.7 million yuan, 154.2 million yuan and 108.5 million yuan in 2015, 2016 and 2017, respectively, according to the circular.

Qeeka was ranked first in terms of market share in the online interior design and construction industry in 2017, with a market share of 25.7 per cent by gross merchandise volume, according to Frost & Sullivan.

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The industry is still at an early stage of development, with intense competition. And Qeeka’s competitors are said to have significantly more financial, technical or marketing resources with which to promote and support their platforms, or to develop new and innovative services.

The company is also highly affected by fluctuations in the Chinese property market, the circular said. An increase in investment in China’s residential property market is crucial for the development of the online interior design and construction industry.

The country’s real estate industry expanded rapidly from 7.18 trillion yuan in 2012 to 10.98 trillion yuan in 2017, and is expected to grow to 15.19 trillion by 2022.