At the time when China capital stocks encountered trust crisis and returned to Hong Kong stocks one after another, Zuo Hui chose to go against the current and launch a sprint to the U.S. capital market on the east coast of the Pacific Ocean.
On the evening of July 24, Beijing time, Shell Group officially submitted its IPO documents to the US Securities and Exchange Commission with the stock code of BEKE. The well-known investment banks Goldman Sachs, Morgan Stanley, Huaxing capital and JPMorgan Chase are the joint lead underwriters of Shell Groups IPO.
It is reported that Shell Group plans to raise up to $1 billion in capital, and information such as the issuing price range has not been disclosed. Earlier, shells rivals Wuba and duo raised $174 million and $72.54 million respectively.
If Shell succeeds, it will create the largest IPO of Chinese enterprises in the United States this year, which is also the first Chinese enterprise with an IPO Financing scale of more than US $1 billion since Tencent music entertainment group landed on the New York Stock Exchange at the end of 2018.
Counter current rush for US stocks
The birth of shell looking for housing bears the dual responsibilities of chain family transformation and listing.
Zuohui once said that if it develops according to the current mode of chain, it is only a matter of time before it can quickly occupy the market. However, no matter in terms of infrastructure construction or C-end services, chain operators will encounter growth bottlenecks and even be injured in the vicious competition of the industry.
In April 2018, shell house search, which was born out of lianjia.com, was established. The main company was Tianjin Chalet Information Technology Co., Ltd., and the actual controller was Zuo Hui. In terms of business structure, shells focus is on the platform business connecting b-end third-party brokers and C-end users, so as to realize digital and online transformation.
At the same time, shell looking for housing began to make full preparation for the listing of chain family. In March 2019, 22 investors, such as Tencent, Baidu, Hillhead and Vanke, withdrew their investment from Lianjia, and the registered capital of the company was changed from RMB 20.5402 million to RMB 13.5582 million, and the management of the enterprise also changed accordingly.
In response, shells response at that time said that the purpose of the capital reduction was to meet the needs of the enterprises development, and the shares of the original investor in chain house would be transferred to shells house search through the mirror image of the agreement. The market also re read that shell to find housing will replace the chain, bear the heavy responsibility of landing on the capital market.
When an enterprise chooses to go public, it should comprehensively consider the destination market and other factors, including market valuation, capital capacity, inclusiveness, convenience, recognition and legal environment. According to tan Congyan, vice president of China Securities Financial Research Institute of China Securities Regulatory Commission and former World Bank senior economist.
The key reason why the U.S. capital market has become the preferred listing place for many Internet companies and new economy companies is that the U.S. market has been most tolerant of these new formats for a long time, especially the special equity arrangement allowing such companies to share different rights and the corporate structure of vie (agreement control).
It is worth noting that mainland companies involved in real estate intermediary business in the U.S. stock market have not been able to ride the storm as imagined. Due to the pressure of performance, it is reported that 58 city has reached a privatization agreement in June this year, and will be delisted from the New York Stock Exchange in the second half of this year. Since the listing of fangduo, the stock price of fangduo is not good.
The capital story is difficult to tell. Due to the impact of Sino US economic and trade frictions and other factors, investors worry about China capital stocks is heating up again. On May 20, the U.S. Senate passed the foreign company Accountability Act, which requires foreign companies to pass the PCAOB audit. Foreign listed companies that fail to meet the standards will be delisted.
Under the turbulence of global capital market, shell is still eager to rush to the United States to find a house, which may be related to the gambling agreement signed by chain members. It is reported that in 2016, when making the b-round financing, the chain house promised that the company would be listed within the next five years, otherwise investors would have the right to buy back at a single interest rate of 8% at any time.
However, not long ago, the joint office operator Youke workshop still had no substantial progress after it went public in the United States for half a year. It was said that it had cooperated with a shell company in the US stock market to conduct a curve listing, and its valuation was 70% lower than that in the past. This time, the shell group is going against the wind, and whether it can seize the beach as expected still needs to be put on the question mark.
Zuo Huis new battlefield
The chain family is an integral part of the shell platform. We firmly believe that the successful experience of chainers has helped pave the way for the construction of industry infrastructure and standards, as well as the rapid and sustainable growth of shells. In the prospectus, Zuo Hui uses a long letter to summarize the growth path of shell and its relationship with chain.
Two years ago, in the context of the strategic transformation of the chain family, the shell house search with light assets was born. But since then, the shell that is both a rule maker and a participant has been questioned by the industry. Anjuke also cooperated with a number of intermediary agencies to launch the industry wide real housing pledge conference and set up the anti shell alliance.
At present, shells business model can be summarized as dual network and dual core, namely data and technology driven online operation network and community-centered offline store network.
On the online level, shell has launched ACN (broker cooperation network) to benchmark MLS (multiple listing service) in the United States. ACN connects different brands and brokers, enabling service providers to realize cooperation and sharing based on the platform, and is oriented to provide high-quality services.
However, MLS is slightly different from shells. Local MLS in the United States is established, managed and operated by the real estate agent associations of various cities. Regional MLS is the union of local MLS. The MLS system established by NAR is the largest regional system in the United States.
However, the pace of shell growth has not been blocked. According to the prospectus, in 2019, more than 70% of the stock housing transactions on the shell platform will be completed through ACN cross store cooperation, and the efficiency has reached 1.6 times of the industry average level. At the same time, shell to find a house all the way to get star investment institutions.
In July 2019, shell housing announced the completion of round D financing, with a scale of more than $1.2 billion. Among them, Tencent led the investment of 800 million US dollars, and other investors included GAW capital, Hillhead capital, source code investment, new horizon, Huaxing capital, and Taiwan capital, among which country garden, a leading real estate enterprise, was also included.
In November 2019, shell completed the D + round of financing, including Softbank, Tencent, Hillhead and Sequoia, with a total financing amount of more than 2.4 billion US dollars. After getting the capital injection, the value of shell looking for a house is slightly higher than $14 billion. Taking into account the previous round a to C strategic financing of chain family, the total financing amount of shell system is nearly 38 billion yuan.
In terms of market scale, from 2017 to 2019, the GTV of shell group was 1014.4 billion yuan, 1153.1 billion yuan and 2127.7 billion yuan respectively, with a year-on-year growth of 84.5% in 2019; the number of stores expanded from 16000 in 2018 to 42800, with more than 260 real estate brokerage brands and 460000 real estate agents.
Revenue data are also rising. According to the prospectus, from 2017 to 2019, Shell Groups total revenue increased from 25.5 billion yuan to 46 billion yuan. In 2019, the revenue of stock house transaction and service is 24.6 billion yuan, that of new house transaction and service is 20.3 billion yuan, and that of other emerging businesses is 1.2 billion yuan.
Affected by the epidemic situation, the trading income of new shell houses in the first quarter of this year dropped by 12.7% to 7.1 billion yuan. In addition, as the platform is still under construction and the cost of human resources is high, the net losses of Shell Group in 2017, 2018 and 2019 were 538 million yuan, 427 million yuan and 2.18 billion yuan respectively, and the net loss in the first quarter of this year was 1.231 billion yuan.
However, the real estate brokerage industry is still a huge cake. According to CIC report, China has the worlds largest housing market and will enter a stable growth period. The second-hand housing trading market will grow at a compound annual growth rate of 12.4%, from 8.4 trillion yuan in 2019 to 15.1 trillion yuan in 2024.
At present, Zuohui, founder of Shell Group, holds 28.9% equity and 46.8% voting right, which is the largest shareholder. Tencent is the largest external shareholder with a shareholding ratio of 12.3%. In addition, its major shareholders include well-known institutions such as Softbank and Hillhouse capital, with shareholding ratios of 10.2% and 5.3% respectively.
Shell group said it plans to use the funds raised for research and development, continue to invest in platform functions and infrastructure technology, the expansion of new home trading services, the diversification of service products and the expansion of business operations to new geographical regions. Zuo Huis new battlefield has been opened.
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