Alibaba Complements The Flow Empire Puzzle: HK $2 Billion "Borrowing" From E-House Layout Of Real Estate

The last "short board" of the domestic Internet giant's "clothing, food, housing and transportation" service industry has begun to be supplemented.

Recently, E-House (China) enterprise holding company (hereinafter referred to as "E-House", 02048. HK) announced that the company has acquired 6.76% shares and HK $1.032 billion convertible notes from Alibaba Group (Baba. Us, 09988. HK). In addition, the two sides also signed an agreement to reach strategic cooperation. Ali and E-House will carry out in-depth cooperation in fields including online and offline real estate transactions, digital marketing and post transaction related services. In addition, E-House also announced plans to acquire 56.19% of Leju. N, an o2o real estate service provider listed in the US. At that time, Leju will become a subsidiary of E-House.

As the second largest real estate transaction and service platform in China, E-House has caused industry shock by three actions, especially the marriage with ALI. However, coincidentally, E-House's increase in Alibaba's holdings occurred after shell, the leading real estate trading and service platform in China invested by Tencent, applied for IPO, and Tencent was its second largest shareholder. More coincidentally, Ali will also become the second largest shareholder of E-House.

In the view of industry insiders, this is the continuation of the fierce competition between the two Internet giants in the daily life service industry such as "clothing, food, housing and transportation". It is also the last short board of Ali in the "clothing, food, housing and transportation" service industry map - real estate.

At present, there are a large number of second-hand real estate agents and second-hand clients in the industry.

According to people familiar with the matter, the online platform jointly built by Alibaba and E-House will be launched soon. "This will be a parallel business platform with flying pig." In the newly established joint venture, Ali accounts for 85% and E-House accounts for 15%. The first phase of the joint venture is planned to invest 5 billion yuan.

Supplement the short board of ecosystem

The joint venture will become the only real estate business entity in mainland China.

Alibaba will provide platform resources and technical support, and jointly establish an online and offline trading ecological closed loop based on the original business of Ali and E-House; E-House will give full play to its own resources and professional advantages in the real estate field, and establish an independent technical operation team to cooperate with the joint venture to carry out work and provide professional support.

At present, in the flow purchasing strategy of Ali's long-term layout, "clothing" and "food" have long been out of fashion, and "travel" has a flying pig, which only lacks a corner of real estate. "The people familiar with the matter said that Ali has always wanted to get involved in the real estate industry, but has not found a good opportunity and model. In fact, this is not the first time Ali has invested in real estate. In May 2019, Alibaba invested RMB 4.3 billion in red star Macalline; in August, red star Macalline established Macalline love home to comprehensively lay out offline real estate intermediary business.

As early as 14 years ago, Ali first contacted real estate through Taobao's wholly-owned acquisition of word-of-mouth focusing on second-hand housing information; 10 years ago, Taobao integrated word-of-mouth network into Taobao real estate channel; Ali launched house auction and special price housing sales through tmall and Taobao platforms, and gradually became a business segment of Alibaba's auction. On the Internet, the real estate partners also invest in the online service platform.

Ali has been looking for good entry opportunities. As early as 2018, when E-House was listed in Hong Kong, Ali subscribed for new shares of E-House with HK $390 million, becoming one of the four cornerstone investors of E-House. This is the further increase of Ali.

According to the announcement, E-House will place 118.3 million shares of the company to Ali at the price of HK $7.00 per share, with a total amount of HK $828.1 million. After the placement, Ali will hold about 8.32% of E-House's shares.

On this basis, the two sides also signed a subscription agreement on convertible notes. Accordingly, Ali will subscribe for convertible notes with a principal of HK $1031.9 billion, a three-year term and an interest rate of 2% per year. The note to share price was HK $10.37 per share. If all the convertible warrants are converted into shares, Ali's proportion of E-House shares will be increased to about 13.26%, becoming the second largest shareholder.

In other words, Ali will pay nearly HK $2 billion for this cooperation, but Ali will also get a channel to the 20 trillion real estate market.

Encounter real estate agency

On July 24, Shell Group publicly submitted a prospectus to be listed on the New York Stock Exchange. According to the prospectus, Tencent and related entities held 12.3% of shell shares, ranking the second largest shareholder.

After this week, E-House announced that it was increased by Ali, and the two sides also signed a strategic cooperation agreement. The node of this action is not accidental.

Tencent's market value has broken through another 5 trillion RMB market value game with China's real estate industry.

A Tencent insider said that the two companies are actually doing their own ecology. Alibaba's own e-commerce attribute is very strong, while Tencent does not do e-commerce itself, only invests in e-commerce.

Although Ali tried to build a pure online real estate sales platform, but without the development mode of offline stores, it could not achieve profits quickly.

E-House's online and offline real estate distribution, however, is realized through Alibaba's online and offline real estate industry. It's more competition pressure behind this.

According to the shell's prospectus, in 2019, shell has contributed to 2.2 million housing transactions, and GTV (total transaction volume) is about 2.13 trillion yuan. Shell has the ambition to be a super platform like Taobao, meituan and didi. It is called "Taobao in the real estate industry" in the future by the outside world. Some people in the industry even regard it as the supplement of "living" after the layout of "clothing", "food" and "transportation".

This is invisible pressure for Ali. Ali is also laying out the whole chain of life services, including Ali health, word-of-mouth.com, hungry man, and Feizhu. Perhaps it is just when Ali noticed the rapid growth of E-House real estate agent network service income that Ali initiated the idea of large-scale investment to compete with shell.

In 2019, E-House's real estate brokerage network services recorded an income of 3.55 billion yuan, a year-on-year increase of 743%, and the proportion of revenue also increased from 7.1% in 2018 to 39%, becoming the "hero" in the substantial growth of revenue, and realized the turning loss into profit of the business sector, driving the overall gross profit rate from 42.5% to 58.9%.

Ali and E-House cooperation, for E-House, means to open up online channels. The opportunity is to compete with the shell. Shell to online second-hand housing transactions, E-House's core business is first-hand housing agent, and is offline. According to the annual report of E-House in 2019, from 2017 to 2019, the compound growth rate of E-House's marketing channel is 376%.

In fact, shell's chain family's market share in Beijing, Shanghai, Guangzhou and Shenzhen far exceeds the second place. According to the industry insiders, the development of the real estate intermediary industry today has formed a market pattern in which the chain family dominates. The Central Plains has a deep moat and is unwilling to borrow too much external capital to expand. At the same time, the market shares of Zhongyuan and Pacific houses have not improved, and some new ones, such as Macalline Aijia, are still in the stage of expansion, which can not shake the status of chain family 。

In terms of the current situation, the most direct way for Alibaba to invest in the market is to invest HK $2 billion directly. In fact, capital has always been interested in the intermediary industry, but the process is mostly not smooth. For example, in 2014, fangtianxia (formerly known as Soufang) tried to take a strategic stake in real estate in the 21st century, and soon announced the termination of cooperation; Ping An also tried to acquire fangtianxia, but the negotiation failed.

For E-House, the cooperation with ALI is no different from a battle of life and death: after the shell IPO, the chain may further erode the market share. At this time, we should actively seek for changes. The introduction of Ali undoubtedly strengthens the sense of survival, especially conducive to the increase of E-House online traffic. "Ali brings not only money, but also the influence of shareholder reputation. You can enjoy the cool by leaning back on a big tree. " People familiar with the matter told the 21st century economic report.

A real estate researcher pointed out that compared with shell and chain family, E-House also urgently needs to develop offline business, while E-House's main business is primary real estate agent. In order to get through with Alibaba online real estate, we still need to continue to expand the business space of E-House, a second-hand real estate agent platform.

It is worth mentioning that Ali has another advantage in increasing its holdings of E-House at this time: the shell Market valuation has reached US $20 billion, compared with E-House's market value of HK $12.6 billion (as of August 7). This shows that the imagination space of Ali and E-House joint venture company exists. In addition, E-House has acquired about 56% shares of Leju, making its business structure more diversified, strengthening its digital transformation, and closer to the attributes of Alibaba.

An Internet industry personage pointed out that Ali, Tencent, byte skipping, meituan, Jingdong, Baidu, even Huawei and Xiaomi are big data companies. The layout intention of these companies in the field of clothing, food, housing and transportation is to realize the flow and purchase the traffic. Ali has a strong e-commerce attribute and needs to constantly strengthen the layout of clothing, food, housing and transportation. Ali wants to get through the data sooner or later.

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