Caixin
Aug 01, 2020 06:34 PM

Alibaba Buys Bigger Stake in Hong Kong-Listed Real Estate Firm

Residential buildings stand in the Taiyanggong area of Beijing. Photo: Bloomberg
Residential buildings stand in the Taiyanggong area of Beijing. Photo: Bloomberg

Alibaba Group Holding Ltd. has agreed to buy HK$828.1 million ($118.5 million) worth of shares in Hong Kong-listed E-House (China) Enterprise Holdings Ltd., as the e-commerce giant expands its presence in the real estate sector to broaden revenue streams.

Alibaba will hold an 8.32% stake in E-House to remain as the fifth-largest shareholder if the deal goes ahead, up from a 1.97% stake it currently holds, according to a statement released by E-House on Friday.

In addition, Alibaba agreed to subscribe for HK$1 billion of E-House’s convertible notes, a type of security that the holder can convert into shares of the issuing company, the statement said. The notes will carry a coupon rate of 2% with a tenure of three years and can be convertible at HK$10.37 per share.

If the notes are fully converted and Alibaba purchases the HK$828.1 million worth of shares, Alibaba will surpass Country Garden Holdings Co. Ltd., China Evergrande Group and China Vanke Co. Ltd. to become the second-largest shareholder of E-House with a 13.26% stake.

Alibaba and E-House have also agreed to cooperate to build an online real estate marketing and transaction platform, the statement said.

The deals are intended to alleviate Alibaba’s weaknesses in housing information and housing inventory. Currently, Alibaba mainly carries its housing businesses on Ali Auction, an online auction platform under Alibaba, which mainly hosts properties from judicial disposal, bankruptcy liquidations, or secondary houses disposed of by housing agencies.

Founded in 2000, Shanghai-based E-House provides agency services for real estate companies, such as formulating and executing marketing and sales strategies for residential projects. It also offers other online services such as brokering, data-sharing and consulting.

E-House went public in Hong Kong in 2018, when it attracted investors including Evergrande, Vanke, and Country Garden. The float followed its delisting in New York in August 2016, when the company was privatized with an estimated market valuation of $987 million.

E-House said in the Friday statement that partnering with Alibaba would help the company further penetrate the market and boost its online orders amid the Covid-19 pandemic.

E-House has also agreed to buy a 56.19% stake in Beijing-based real estate services provider Leju Holdings Ltd. which offers online advertising and online listing services, the statement said.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

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