Real Estate Arm of Appliance Giant Midea Files for IPO

Midea Real Estate Holding Ltd., the property arm of the appliance manufacturing giant of the same name, filed for an initial public offering (IPO) on the Hong Kong Stock Exchange, raising new funds as it hopes to tap synergies with its parent with the rise of smart buildings.

While the company did not disclose the size of the IPO or the amount of shares to be offered, industry publications suggested that the listing may raise in excess of $1 billion. The company’s property interests were worth about 95 billion yuan ($14.8 billion) as of March 31, the company said in a prospectus filed on Thursday, citing an independent valuation from Jones Lang LaSalle Corporate Appraisal.

Midea Real Estate has operated in the property industry for 14 years and had a portfolio of 117 projects across 33 cities in 11 provinces and one municipality across China, according to the prospectus.

While its projects span a geographically diverse area, Midea Real Estate said its main interests are located in strategic economic hubs such as the Pearl River Delta and the Yangtze River Delta economic regions, as well as the Bohai economic zone and southwest China.

Midea Real Estate sits outside China’s top 10 largest real estate developers, according to the South China Morning Post, citing data from property consultancy Guandian. However, the company is targeting further growth in the mid- to high-end property sector.

The company aims to take further advantage of its connections to parent Midea Group, one of China’s leading appliance makers, which is developing “Smart Homes,” a network-connected systems that allow for remote control of security, temperature and lighting, among other things. Most of the company’s new property developments slated for completion by the end of the year will come with Smart Home systems, according to the filing prospectus.

Midea Real Estate’s revenue grew nearly 50% to 17.7 billion yuan in 2017, and its profit nearly doubled to 1.9 billion yuan over that time. Although the company runs property management services and operates commercial projects, the majority of its profits come from property development and sales, accounting for 97.8% of its profits in 2018.

Midea Group founder He Xiangjian and his daughter Lu Deyan own 100% of the company before the IPO. He is China’s 10th richest man, according to Bloomberg.

Contact reporter David Kirton (davidkirton@caixin.com)