Sunac China to acquire 6.25% of realty service provider Homelink for $375.4m

Chinese property developer Sunac China Holdings, through its Sunac Real Estate subsidiary, will purchase a 6.25 per cent stake of VC-backed O2O real estate services platform Homelink for RMB2.6 billion ($375.4 million) by way of capital increase, the company said in a January 9 announcement.

Upon closing the transaction, Homelink will become an associated company of Sunac China, which will be entitled to appoint one director for the invested firm.

Homelink’s registered capital currently stands at RMB17.2 million but will increase to nearly RMB1.15 billion post the transaction as Sunac Real Estate subscribes for new shares.

Meanwhile, the property developer said the consideration of RMB2.6 billion was “fair and reasonable” with reference to the market value of the assets of Homelink attributable to its 6.25 per cent equity interest.

“The company believes that there will be a rather broad development outlook for Homelink, considers that the capital increase is a good investment opportunity and believes that it will generate desirable investment return for the company in the future,” Sunac China said, explaining that the investment was carried out on normal, fair and reasonable commercial terms.

“The company is optimistic about the growth potential of the real estate stock trading markets in the PRC and Homelink has already established absolute advantage in such market,” it added.

Sunac China will finance this investment by its internal resources.

Homelink, founded in 2001, is the operator of Lianjia.com, a major website for listings of home sales and rentals. Homelink’s services also cover secondary residential property transactions, new property transactions, leasing and decorating services.

With a network of over 8,000 branch offices across the PRC, the company recorded a more than 10-fold increase in after tax profit in 2015, which was RMB808.6 million. The consolidated net assets of Homelink as of June 2016 amounted to RMB1.6 billion.

Meanwhile, China Money Network reported that the company’s valuation will reach RMB41.6 billion ($6 billion) post the Sunac China investment.

In April 2016, Homelink bagged a $926 million series B financing led by Huasheng Capital. Hillhouse Capital, Matrix Partners and Chinese majors Baidu and Tencent participated the round.

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