Leading Internet technology company in residential services in China: Fangdd Network Group (DUO)

Fangdduo Fangdd Network Group (NASDAQ:DUO) was founded in 2011 and is headquartered in Shenzhen, China. It has 1,655 full-time employees. It is China’s leading residential service Internet technology company and operates China’s largest online real estate trading platform powered by SaaS . Through innovative use of mobile Internet technology, cloud technology and big data, Fangduoduo has tailored SaaS solutions for real estate brokerage merchants in China to realize the online aggregation of key resources for real estate transactions, including housing, customers, funds and transaction data. Empowering brokerage merchants to easily conduct business online, improving their service efficiency and broadening the scope of services, has changed the way Chinese real estate brokerage merchants operate.

Fangdd Network Group

Fangdd Network Group (DUO):

Fangduoduo was established in October 2011, when the Chinese property market was in its golden age, and it grew rapidly at the beginning of its establishment. In 2012, Fangduoduo has entered 10 cities and achieved a total platform transaction volume of 4 billion yuan; in 2013, it has expanded to more than 40 cities and achieved platform sales of 40 billion yuan. With the rapid development of the Internet, Fang Duoduo ushered in a bright moment in 2014. Fangduoduo’s co-founder and CTO Li Jiancheng once revealed in a high profile: “In 2014, the real estate transaction value served on our platform was about 200 billion yuan, mainly for new houses.” At that time, Vanke ranked first in the real estate market. It has just passed the 200 billion yuan mark.

The rapid expansion of scale has made Fangduoduo countless in the capital market. In July 2013, Fangduoduo completed a series A financing of 60 million yuan; in July 2014, the total amount of round B financing reached 52.5 million US dollars; in September 2015, Fangduoduo again won the C round of financing, and the financing amount was as high as At 223 million U.S. dollars, Fang Duoduo was valued at more than 1 billion U.S. dollars at the time, becoming the “unicorn” company of that year. However, since 2016, Fangduoduo stopped its “opening up” pace. At that time, the property market was under the strictest regulation, and the volume of new house transactions declined significantly. Since it received US$223 million in financing in September 2015, Fangduoduo has never received new financing, and the capital chain has increasingly become the focus of attention.

As a leading Internet technology company in the field of residential services in China, the company operates China’s largest online real estate transaction platform powered by SaaS. As of December 31, 2018, among the nearly 2 million real estate brokerage merchants in China, more than 910,000 were on the Fangduoduo platform, with a penetration rate of over 45%; and this number continued to grow. As of June 30, 2019, Fangduoduo Duoduo platform has more than 1.07 million registered brokerage merchants.

Fangdd Network Group (DUO) Prospectus:

  • The funds raised by the company will be mainly used to enhance research and development capabilities, investing in technology, sales, marketing and brand promotion, working capital, and other general corporate purposes including potential investments and acquisitions for supplementary business, assets and technology.
  • The company will adopt a dual-shareholding structure. Fangduoduo’s Class A and Class B common shares differ only in conversion rights and voting rights. Class A ordinary shares cannot be converted into B ordinary shares; Class B ordinary shares can be converted into Class A ordinary shares. Each Class A common stock contains 1 voting right, and Class B common stock contains 10 voting rights.
  • The three co-founders of Fang Duoduo: Duan Yi, Chairman and CEO of Fang Duoduo, Zeng Xi, Director and Chief Operating Officer, and Jiancheng Li, Director and Chief Technology Officer, will hold all of the company’s Class B ordinary shares, which will be accounted for after the IPO. 83.6% of the company’s voting rights.
  • Before the IPO, Fang Duoduo’s directors and executives held a total of 785,123,434 shares of the company’s common stock, accounting for 47.4% of the total share capital. After the IPO, they will hold a total of 167,985,376 Class A common shares and 619,938,058 Class B common shares of the company, accounting for 42.9% of the total share capital and 85.8% of the voting rights.
  • Among the company’s major shareholders: Duan Yi is the company’s largest shareholder with a shareholding ratio of 19.8%; after the initial public offering, the shareholding ratio has dropped to 17.8% and voting rights are 44.4%. Zeng Xi is the second largest shareholder with a shareholding ratio of 9.7%; after the initial public offering, the shareholding ratio has dropped to 8.8% and voting rights are 21.8%. Greyhound Investment Ltd. is the third largest shareholder, holding 136,402,044 ordinary shares, with a shareholding ratio of 8.2%; after the initial public offering, the shareholding ratio has dropped to 7.4% and voting rights are 1.8%. Li Jiancheng is the fourth largest shareholder with a shareholding ratio of 7.8%; after the initial public offering, the shareholding ratio fell to 7.1% and voting rights were 17.5%. Merlinano Limited is the fifth largest shareholder, holding 127,089,187 ordinary shares, with a shareholding ratio of 7.7%; after the initial public offering, its shareholding ratio fell to 6.9% and voting rights were 1.7%.
  • In the first half of 2019, total revenue was RMB 1.6042 billion (approximately US$233.7 million), compared with RMB 1.0326 million in the same period of 2018; revenue cost was RMB 1.2605 billion (approximately US$183.6 million), compared with RMB 8.113 in the same period last year 100 million yuan; gross profit was 343.7 million yuan (approximately US$50.1 million), compared with 221.3 million yuan in the same period last year; operating profit was 71.7 million yuan (approximately US$10.4 million), compared with 18 million yuan in the same period last year; net The profit was RMB 100.3 million (approximately US$14.6 million), compared with RMB 37.6 million in the same period last year.

Fangdd Network Group (DUO) investment:

Fangduo Fangdd Network Group (NASDAQ: DUO) plans to list on NASDAQ on 11/1/2019 IPO, issue price $13.00-$15.00, issue 7 million shares, raise $98 million, Morgan Stanley , Citigroup , UBS , CICC and AMTD Hong Kong (AMTD) will act as joint underwriters of Fangduoduo’s initial public offering.

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