Q&K International Group, one of the largest branded long-term apartment rental operators in China, on Monday filed for an initial public offering (IPO) in the US.
The company listed the size of the offering at $100 million, a placeholder amount likely to change, according to a filing with the U.S. Securities and Exchange Commission. The company plans to float its shares on Nasdaq under the symbol QK.
With its filing, Q&K has officially joined the race to become the first long-term rental apartment operator in China to go public overseas.
Beijing-based rival Danke Apartment is said to be targeting to raise between $500 million and $700 million in a US IPO this year, according to sources cited by Chinese publication Xueqiu Finance. The company closed $500 million in a Series C round from Ant Financial and Tiger Global Management in March this year.
Another Chinese long-term rental housing company, Ziroom, which is backed by Warburg Pincus, Tencent and Sequoia Capital China, is aiming to go public in the United States to raise $500 million to $1 billion, IFR Asia reported, citing sources.
These well-funded companies are competing in the Chinese long-term apartment rental market, which reached 1.5 trillion yuan ($211.5 billion) in 2018 and is expected to reach 3 trillion yuan ($429.29 billion) in 2024.
“Driven by the rapid urbanization, rising housing prices, millennial mindsets of sharing economy and supportive government policies, China’s long-term apartment rental market is experiencing rapid growth,” Q&K said.
Q&K International Group, founded in 2007 and based in Shanghai, leases apartments from landlords and transforms these mostly from bare-bones conditions into standardized furnished rooms for young people seeking affordable residence in cities.
The company has grown its network from 40 rental units in Shanghai as of December 31, 2012 – the year it started substantial operations – to 91,234 units across six cities in China as of December 31, 2018, according to its prospectus.
Q&K incurred net losses in the fiscal year of 2017, 2018, and the nine months ended June 30, 2019, of 245.4 million yuan, 499.9 million yuan ($72.8 million) and 373.2 million yuan ($54.4 million), respectively, the prospectus indicated.
Q&K International Group plans to use the IPO proceeds to expand its apartment network, including the related capital expenditure and sales and marketing activities. The company will also invest some proceeds into technology systems and infrastructure, as well as general corporate purposes.
Morgan Stanley and investment bank China International Capital Corporation Limited (CICC) are the joint bookrunners on the deal.