Chinese Portal FangDD Raises $8M Via Direct Offering as Nasdaq Status Comes Under Threat

July 18, 2023
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The Chinese real estate portal operator FangDD has announced that it will raise $8 million via a direct offering of 11.4 million American Depositary Shares (ADS).

The move comes just six months on from a convertible note raise of $21 million that FangDD resorted to in January.

According to a company press release, the latest offering will consist of 11,428,565 American Depositary Shares at a purchase price of US$0.70 and regular warrants to purchase up to an aggregate of 11,428,565 ADSs. The offering is expected to close tomorrow (19th of July) with the money raised to be used for "general corporate purposes".

The move comes despite heavy cost-cutting measures in 2022 which saw sales and marketing expenses reduced by 80%, product development by 61% and admin costs by 77%.

Like all Chinese real estate marketplace operators, FangDD (not to be confused with competitor Fang.com) has been adversely impacted by a combination of factors including the Chinese government's covid-zero policy and a real estate bubble in the market.

FangDD has been listed on the Nasdaq since raising around $78 million in an offering of 6 million American depositary shares in 2019.

Now though FangDD's status as a listed entity is under threat with company bosses having been issued with a notice of minimum bid requirement at the end of June. If FangDD's share price does not close at or above $1 for ten consecutive days before the end of the year it could face delisting from the exchange.

Shares are currently trading at around 40 cents with the company's market cap standing at just $22 million.

FangDD's stock price and its permanence on an American exchange could soon become a moot point. After the 'Holding Foreign Companies Accountable Act' (HFCAA) was signed into law by Donald Trump in 2020 the stocks of Chinese companies listed on American exchanges have been on borrowed time. The company uses a Chinese auditor which the SEC is not allowed to inspect. If the situation continues into 2024, FangDD's shares will be delisted.

July 18, 2023
Since March 2020 Edmund's job has been to read about, write about, collect data on, analyse and generally know about real estate marketplaces and the companies that run them. Before that he worked at the aggregator Mitula Group (which became Lifull Connect) for five years.

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