From 2004 to 2008, the total gross floor area of residential properties sold in China increased at 13.4% annually. Some of the drivers included: improved property rights, government reforms, rapid urbanization and rising affluence. As a result, there is lots of demand for useful real estate data and consulting services. And, the leading provider is China Real Estate Information.
Well, today the company went public in the US, raising $216 million. The IPO price was $12 (between the price range of $11.80 to $13.80). So far in today's trading, the shares of China Real Estate are up 15% to $13.80.
Interestingly enough, China Real Estate is a subsidiary of E-House (NYSE: EJ), which is a major provider of real estate brokerage and investment services. In other words, this traditional services company needed to create its own information system. So why not monetize it?
China Real Estate's platform is called CRIC, which now has 38,200 developments/buildings and 24,200 parcels of land for development (across 56 cities throughout China). The company started to commercialize the system in July 2006, which has been extremely successful.
From 2006 to 2008, revenues spiked from $5.4 million to $50 million. What's more, for the first half of this year, the revenues amounted to $31.2 million, with net income of $11 million. Revenues come from a variety of sources, such as subscription fees, consulting engagements and advertising.
In fact, with the IPO, China Real Estate will close its deal to purchase the Internet real estate business from SINA Corporation. The upshot should be a nice boost in the user base, helping to generate more revenues from the CRIC system.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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