How many people would be willing to pick a home, hold negotiations over the property and make the payment — using nothing but a mobile phone? Not too many, one would reckon, but Chinese firms Leju and Tencent certainly think otherwise.
Last week, Tencent announced that it had invested US$180 million in online real estate agency Leju in return for a 15 percent stake in the latter.
After getting its hand on e-commerce powerhouse JD.com, restaurant review site Dianping.com, search engine Sogou and taxi hailing app Didi Dache, Tencent is now stretching its internet empire to another corner.
Under the latest deal, Leju can use Tencent Weixin accounts for marketing purposes, sending information about real estate projects and related issues to the users of the mobile messaging app. In return, it will use Weixin payment services as its default payment method, both online and offline.
While the companies are yet to reveal the details, it is however difficult right now to determine how the tie-up will help Leju grow its business and fend off competition.
But one thing is for sure — the deal will help Leju sell its shares as it goes public. The real estate website lodged a filing with US regulators earlier this month to raise up to US$200 million in an initial public offering.
Tencent, meanwhile, has replicated the pattern of its previous investment in JD.com. Firstly, the capital injection into Leju took place just ahead of the target going public, giving Tencent about 15 percent stake. And, Tencent already runs a similar but far less successful online agency business QQ house.
Analysts expect the pre-IPO firms to definitely get higher valuations with Tencent’s backing. “In fact, Tencent might not need to pay any hard cash at the end of the day,” a Hong Kong investment banker told the weekly newspaper Economic Observer, as potential share price appreciation may already cover Tencent’s initial investment.
Leju, one of China’s biggest online property agencies, offers real estate e-commerce, online advertising and property listing services in China. The company also operates real estate and home furnishing websites for Sina Corp and Baidu. After the partnership with Tencent, home buyers can get relevant information through Weixin, consult and negotiate through the instant messaging platform and pay through the Weixin Payment accounts to seal the deal.
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