Venture-backed Tubatu, China’s largest online home renovation platform, is heading to Hong Kong for an initial public offering (IPO) that could raise an estimated $200 million even as the company continues to lose money.
The firm’s filing with the Hong Kong Exchange (HKEx) has not specifically disclosed the number of shares it seeks to offer and the target fundraising size but an earlier Bloomberg report said Tubatu eyes $200 million in its listing.
According to its filing, Tubatu’s revenue from the online platform business in the six months ended June 30, 2018 dropped to Rmb213.7 million ($31.3 million) from Rbm402.3 million ($59 million) in the same period in 2017.
Its revenue from the home renovation contracting business in the first half of this year was Rmb56.3 million ($8.2 million), down from Rmb478.8 million ($70 million) in 2017.
The company reported a Rmb636 million ($93 million) loss for the six months ended June 30. During the same period last year, Tubatu incurred Rmb709.5 million ($104 million) loss.
Despite its declining revenue, Tubatu said its user base has grown significantly since its inception. From 71,900 registered home renovation contractors in 2015, the firm said it had 84,500 renovation contractors as of June 30, 2018.
Users of the platform have also increased from 7.9 million in 2015 to 26.3 million as of the end of this year’s first half.
The company said it will use about 30 per cent of the proceeds from the IPO to upgrade its technology and digital platform. Another 30 per cent will be allocated to acquire more user traffic. The rest of the proceeds will finance Tubatu’s sales force expansion and for strategic investments.
China’s online home renovation market is still slow but is expected to grow in the near term. According to iResearch, the penetration rate of online home renovation services in China increased from 2.4 per cent in 2012 to 7.3 per cent in 2017. The rate is projected to reach 16.9 per cent in 2020.