Housing.com, China's Fosun in talks over $100 million investment
Fosun International Ltd, the investment arm of China's biggest closely held conglomerate, is in initial talks to invest about $100 million in Locon Solutions Pvt. Ltd, the owner of property website Housing.com, according to two people familiar with the negotiations.
Fosun group has approached Housing.com through its investment arm, confirmed the two people. One of them said that Housing.com is on the road to raise another round of funding and this proposal could be considered as part of that fund raising. "Rahul Yadav, chief executive officer, had a meeting with Fosun Group management in the last week of May and the discussions are still at initial stages," said the first person cited above.
"If the deal goes through, it should help Housing.com to enter a new line of business. Over the last couple of months, Housing has been working with a few real estate developers to sell them predesigned buildings which can then be sold on Housing.com," he added.
There are about 20,000 real estate developers in the country and most of them do everything in-house from design and construction to sales and marketing. Housing.com plans to work with these developers to sell them standard predesigned houses, designed by reputed houses. These houses will then be marketed and sold on Housing.com.
Housing.com declined to comment. An email sent to the Fosun group on Friday was not answered. "If Fosun is interested in Housing.com, then it is an indicator that companies are seeing potential in integrating bricks and clicks in the longer run," said Ramesh Nair, chief operating officer, Jones Lang LaSalle (JLL) India. Even though such a model is difficult to implement, given the complexities involved in the real estate sector in India, consultants say that online enquiries can be a useful source of information for developers.
"The online platform can be used as a tool by real estate developers to know the pulse of the buyers. The requirement of the buyers can be assessed through the data of online platforms, which can then be used by developers to plan projects," said Sanjay Dutt, executive managing director, South Asia at Cushman and Wakefield. Dutt added that interest in India investments from Chinese investors is not surprising given the slowdown in the Chinese economy and the country's plans to rebalance their economy towards consumption.
invest more than 50% of their future investments outside the country. Besides the US and Europe, they are keen for investments in India in backdrop of revived economy," he said. Shanghai-based Fosun group is a $10-billion conglomerate which, among other businesses, also has a construction business and a real estate investment business in China. Fosun Property Holdings, the property investment and management platform of Fosun Group, has an exposure in 26 cities across China with assets under management at renminbi 140 billion ($22 billion), according to its website.
For Housing.com, this will be the fifth round of institutional fund raising. In December 2014, parent firm Locon Solutions had raised about $88 million from a clutch of investors, including Qualcomm Ventures, Nexus Venture Partners, DST Global Lp, Falcon Edge Capital Lp, SoftBank Corporate, Digital Nirvana Fund Co. Ltd and Helion Venture Partners III Llc. Till date, Housing.com has raised about $120 million across four rounds. Since discussions are at an early stage, the valuation at which the proposed funding will be raised could not be ascertained. According to a 17 December report in The Times of India, the funding round closed in December valued Housing.com at around $250 million (Rs.1,550 crore).