China’s biggest social media and gaming company Tencent is reportedly investing $1 billion in Beijing-based online-to-offline real estate agency Lianjia, which is raising $3 billion in a private equity round that values the company at $13 billion.
According to a Wall Street Journal report, the said investment will give Tencent exposure to the booming housing market in China and allow it to diversify its business. Tencent’s business model is focused on gaming and social media.
Aside from Tencent, private equity firm Warburg Pincus LLC is also reportedly joining the funding round with a $500-million investment in the company that operates more than 8,000 retail outlets offering real-estate brokerage services in 28 Chinese cities.
Lianjia, also known as Home Link, operates Lianjia.com and its business owns 7 per cent market share in China’s online and offline real estate services market as of 2016. It has close to 150,000 property agents.
Both Tencent and Warburg Pincus have not issued a statement about its investment in Lianjia as of this posting. Lianjia also has not made an official statement about its latest funding round.
Sources quoted in the WSJ report said Lianjia will use the proceeds of the latest funding round to expand Beikie, its recently launched real-estate brokerage site that offers brokerage and financial services to Chinese renters and home buyers.
Lianjia last raised Rmb3 billion ($439 million) in a Series D funding round in April 2017 led by China Vanke. The two parties have a long-standing partnership. Since 2014, Lianjia has been a strategic partner with Vanke for property sales and online marketing work.
Prior to that, in April 2016, Lianjia raised Rmb6 billion ($926 million) series B from Huasheng Capital, Baidu Inc. and Tencent Holdings Ltd. At the time it was reported that Lianjia was looking at a public listing in either China, Hong Kong or the NASDAQ.
Data from China’s National Bureau of Statistics showed that residential property sales in the country totaled Rmb6.6 trillion ($964.26 billion) in January – July period of this year, a 16 per cent rise from the same period in 2017.