Feb 25, 2021 02:32 PM

Primavera-Led Consortium to Invest $551.7 Million in Chinese Recruitment Firm Zhaopin

(Deal Street Asia) — A consortium of investors led by China-based fund manager Primavera Capital Group has entered into an agreement to invest about $551.7 million in Zhaopin, giving the Beijing-based online recruitment platform a valuation of around $1.7 billion.

Other investors comprise Zhaopin’s management team, and its existing shareholder FountainVest Partners, signed the deal with SEEK International Investment, a global recruitment firm that joined an investor group to merge with Zhaopin and privatise it in 2017.

Upon the completion of the transaction, the consortium will own a combined 76.5% stake in Zhaopin, with Primavera becoming the firm’s largest shareholder. SEEK’s ownership will reduce to 23.5% from 61.1%.

SEEK expects to receive gross proceeds of about $551.7 million. After deducting transaction costs, tax, and forex, the net proceeds from the deal is expected to be about $442.9 million, SEEK disclosed in a statement.

Primavera’s strategic investment will further strengthen Zhaopin’s capabilities in the local market and enable its continuous investments in smart algorithm-driven technology and professional services said Zhaopin CEO Evan Guo.

Established in 1994, Zhaopin claims to have 230 million registered individual users, 6.16 million corporate clients, and 6.3 million daily active users. Besides, the website reportedly gets about 7.8 million daily job postings.

The funding comes in at a time when online recruitment services in China have enjoyed substantial growth in the past year. Job seekers and recruiters have been forced to resort to the Internet amid the COVID-19 pandemic.

According to consultancy firm iResearch, on an average, over 35 million monthly unique devices accessed online recruitment apps in China in the first half of 2020 (H1 2020), recording a 12.4% growth from the first quarter (Q1) to the second (Q2).

Monthly unique devices refer to the number of electronic devices including mobile phones and tablets that have accessed a certain online recruitment app in China. Based on iResearch analysis, Zhaopin has led the pack in H1 2020, followed closely by Shanghai-based 51job. The two companies have taken over 70% of the domestic market share as of June 2020, leaving less space for smaller players like Tencent-backed Boss Zhipin, and Liepin.

Zhaopin went public on the New York Stock Exchange (NYSE) in a $76-million initial public offering (IPO) in June 2014. It was taken private in September 2017 by investors including FountainVest Partners and Asian private equity (PE) powerhouse Hillhouse Capital in a deal that valued it at $1.01 billion.

The investment marks Primavera’s move to increase exposure in China’s human resource management sector. “The transformation of China’s economy, the increasing structural contradiction between supply and demand in human capital, and the impact of COVID-19 pandemic have presented enormous challenges on China’s human resource management market,” said William Wang, a founding partner at Primavera.

“Zhaopin has managed to seize the opportunities brought by the emerging online employment trend and the rapid adoption of SaaS (Software-as-a-Service) model in the post-pandemic era,” said Wang.

This story was first published by Deal Street Asia

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