SouFun eyes US$300m flotation in New York

BEIJING: SouFun, China's leading real estate website, may be preparing for a US initial public offering (IPO) worth up to US$300 million (RM957 million) in what could be the largest such listing by a China Web company this year.

JPMorgan Chase, Bank of America Merrill Lynch and UBS were working on the deal, although no final mandates had been given, people at the three banks said on condition of anonymity because nothing had been finalised. Media reports have said the Goldman Sachs Group and Deutsche Bank may also be vying for the mandate.

SouFun, 51 per cent owned by Australia's Telstra Corp, aimed to list on the New York Stock Exchange and could make its offering by the end of the year, one of the people working on the deal said.

Telstra bought its stake in SouFun in 2006 for US$254 million, giving the company a valuation of about US$500 million at that time. Chief executive and founder Vincent Mo Tianquan remains as a significant shareholder, while the rest of the shares are held by management and venture capital firm IDG.

Telstra said then that it would like to list SouFun on the exchange in 2008, but the plan was dampened by the ensuing economic downturn. As the world economy picks up, Mo has said on several occasions since June 2009 that an IPO would take place this year in Hong Kong or New York.

Over the past four years, the company has risen in value and is worth about US$1 billion.

With the fast economic development in China, the number of people who need information on buying and renting houses has seen geometric growth. Industry analyst Xiang Ligang said: "Real estate developers spend huge money on advertising on this kind of websites."

Based on a valuation of about US$1 billion and a usual float of 25% of a company for such listings, SouFun's share sale could be worth US$100 million to US$300 million, a banker working on the deal said.

SouFun covers 104 cities and has 20 million registered users, media reports say. Mo once said SouFun covered 60% of the online real estate advertising market.

An analyst said he thought it was not a good time to have an online real estate IPO. "I'm told that online real estate advertising is sliding because of the China government's efforts to cool the property sector," he said.

A Telstra spokesman declined to comment.

SouFun competes with market leader China Real Estate Information Corp, which raised US$216 million in a Nasdaq IPO in October last year. — South China Morning Post