Chinese HR SaaS provider CDP files for $125m New York IPO

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CDP Holdings, which provides software for human resources management in China, last Friday has filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission to raise up to $125 million.

The company, which is yet to disclose pricing terms of the IPO, plans to go public on the New York Stock Exchange under the symbol “CDP.”

CDP, founded in 2006, operates as a human capital management (HCM) company that mainly provides services including payroll, tax, social security management, benefits programs, and workforce management through a software-as-a-service (SaaS) platform.

The company has offered HCM services to over 3,600 customer entities in China and worldwide, representing about 1,000 group customers as of September 30, 2019, and approximately one million user accounts as of November 15, 2019, according to its prospectus.

The firm, headquartered in Shanghai, also leases offices in Beijing, Hong Kong, Shenzhen, Guangzhou and several other second-tier cities in China.

The company is developing in the HCM market, whose total revenues in China grew from about 176 billion yuan in 2014 to 363 billion yuan ($51.8 billion) in 2018, and is expected to further increase at a compound annual growth rate (CAGR) of 18 per cent to reach 842 billion yuan ($120.0 billion) in 2023, according to Frost & Sullivan.

CDP offers cloud-based workforce management services, targeting a large number of emerging tech-driven companies that grow “at exceptional paces” nationwide and find it “challenging to staff and manage workforces,” said the company in the prospectus.

The company recorded a 28.1 per cent increase in net revenues, from 526.4 million yuan for the nine months ended September 30, 2018 to 674.2 million yuan ($94.3 million) in the same period in 2019.

In 2017 and 2018, the company booked net losses of 7.3 million yuan and 31.2 million yuan ($4.4 million), respectively. The net losses kept expanding to reach 157.5 million yuan ($22.0 million) for the nine months ended September 30, 2019, shows the prospectus.

Garamond Partners Limited, which is controlled by Wayne Wei Wang (chairman and CEO) and Wei Lu (president and director), currently owns a 31.4 per cent stake in CDP Holdings.

Nasdaq-listed Chinese recruitment website 51job holds a 20.2 per cent stake, while private equity firm China Broadband Capital (CBC) has a 14.0 per cent stake. Other shareholders in the company include Investor AB with 11.9 per cent shares, CSV Capital Partners with 9.4 per cent shares, and Eight Roads with 6.5 per cent shares.

CDP plans to use the proceeds from the offering to enhance its SaaS platform, and lift sales and marketing efforts to expand service coverage in China and internationally. The company will also use the money to pay for general corporate purposes.

BofA Securities, Citi and Haitong International are the joint bookrunners on the deal.

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.