Tencent and Warbug Pincus Inject $2Billion into Lianjia
Despite recent regulations and the property sector’s uncertain future, entities like Tencent and private-equity firm Warbug Pincus are placing their bets on China’s residential rental sector.
One of China’s largest real estate brokerages, Lianjia, is planning to raise $2 billion in funds from investors. The private fundraising round includes tech giant Tencent, which plans to invest $1 billion, as well as private-equity firm Warbug Pincus, which plans to invest $500 million.
Founded in 2001, Beijing-based Lianjia now has over 8,000 physical branches and 150,000 property agents in 28 cities across China. The company also runs an app, a website, and offers services such as real-estate financing, interior design, and property management.
Earlier investors in the firm includ major property developers China Vanke Co. and Sunac China Holdings Ltd. According to some analysts, the current fundraising round will likely value the company at $13 billion.
Lianjia has plans to use the funds to expand its recently launched website Beike. The website provides renters and buyers with brokerage and financial services. The company is also discussing an IPO in either Hong Kong or the US in the next several years.
China’s real-estate market has surged over the past several years, with the country’s preference for home ownership and rising incomes helping to bolster sales. At the same time, government support for expanding the rental sector, in combination with surging home prices, have increased interest and investment into the residential rental sector.
According to a report that was released by Lianjia in December, the property firm is seeing a surge in home owners upgrading to larger homes, as well as continued consumer confidence towards rising housing prices. At the same time, the report noted that government regulations will play a key role in the market over the next several years.
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