Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
58.com is China’s Craigslist, Qunar.com a travel site.
While investors await the anticipated IPO of China’s largest e-commerce company, two other Chinese Internet firms went public this week on U.S. exchanges.
58.com, a classified site similar to Craigslist, began selling shares yesterday on the New York Stock Exchange. Travel site Qunar.com began selling shares today on Nasdaq.
Among the other Chinese firms that trade on U.S. exchanges are online retailers Dangdang.com, No. 16 in the Internet Retailer Asia 500, VIPShop Holdings Ltd., No. 20 and Lightinthebox Holding Co. Ltd. Alibaba Group, the dominant e-commerce company in China and No. 1 in the Asia 500, is expected to go public, most likely on a U.S. exchange, within the next year.
58.com posted a net loss of $30 million on sales of $87.1 million of 2012. This year it reported net income of $300,000 on sales of $58 million from January to June. Unlike Craigslist, 58.com charges advertising fees to local merchants, such as moving and cleaning companies. After its first day of listing, the company’s share price jumped 48% to $25.
The potential for online local classified advertising is huge in China, given the country’s many large cities. According to the prospectus of 58.com and data from research firm iResearch, there are 45 cities in China that has more than 2 million residents, compared with only four in the United States. Revenue from China’s online classifieds market will grow from $600 million in 2013 to $2.3 billion in 2017, estimates iResearch.
58.com founded in 2005 in Beijing, remains a free information platform for end users. In the long term, the business model will migrate from information platform to transaction platform, but the company has no plans to become an online retailing platform in the next three years. CEO of 58.com, Shao jinbo says.
In 2012, 58.com reports $10.69 million revenues from its group-buying business, which only represents less than 2% of its total revenue. In the third quarter of this year the group-buying business only generated $300,000 in revenue, reflecting fierce competition about providers of these Groupon-like offers. For example, Chinese search engine giant Baidu Inc. acquired a 59% stake in Nuomi.com, a leading group-buying company for $160 million cash in this August.
58.com plans to invest more on mobile development, as mobile devices account for 40% of its traffic, the company says.
Qunar.com allows travelers to book reservations online. It has not reported a profit in any of the last three fiscal years and posted a net loss of $2.76 million for the first half of 2013. Revenue in 2012 totaled $81.5 million and for the first six months of this year $58.5 million.
As an online search engine, Qunar.com helps consumers to compare prices, but doesn’t let them make travel reservations. According to iResearch, China’s online travel market jumped from $7.9 billion in 2008 to $27.9 billion in 2012, a 37% annual growth rate.
Qunar.com attracted 200 million users from June 2012 to June 2013, about 20% of them consumers using mobile devices.
Qunar’s shares ended the day at $28.50, up 90% from their opening price.
58.com sold 11 million shares at $17 in its IPO and raised total $187 million. Qunar.com sold $11.1million shares at $15 per share, with a total offering size of $167 million.