58.com Seeks Acquisitions With $300 Million War ChestBloomberg News
58.com Inc., the company that made the largest initial public offering in the U.S. among Chinese peers last year, will seek acquisition opportunities in China to boost local information services.
The classifieds website operator, which like San Francisco-based Craigslist lets users sell everything from used cars to apartment rentals, is looking at Chinese Internet companies that provide information searches in smaller cities, 58.com Chairman and Chief Executive Officer Yao Jinbo, said in an interview on Jan. 10. The company holds more than $300 million of cash, said Yao.
58.com is competing against China’s largest Internet companies including Alibaba Group Holding Ltd. and Baidu Inc. for advertising merchants and online shoppers migrating to mobile devices. The Beijing-based company, founded by Yao in 2005, raised $187 million in an IPO in the U.S. in October, and its market value has more than doubled since.
“It won’t take long when the majority of our customers access our platform from mobile devices,” said Yao. “Most of the money we raised, we want to invest it on mobile.”
The company’s top priority is mobile development this year, said Yao. About 40 percent of its 130 million monthly active users access its mobile app and Yao expects the number of mobile users to surpass personal computer users sometime in 2015.
58.com surged 6.4 percent to close at $44.52. The stock has jumped 162 percent since it started trading less than three months ago.
Alibaba, China’s largest e-commerce company, has also ventured into business for second-hand cars and homes via its bidding platform paimai.taobao.com.
To boost competitiveness, 58.com will stick to its key areas on mobile development including apartment rental, job postings and second-hand car transactions, said Yao.
The company’s third quarter revenue rose 78 percent to $41.6 million, boosted by a rise in number of paying merchant members and marketing sales for online jobs and property postings. Profit reached $8.49 million in the third quarter, reversing a loss of $6.3 million in the year-earlier period.
The number of paying merchant members rose 73 percent to about 353,000 by the end of the third quarter from a year earlier, according to an earnings call in November. There are more than 4 million merchants using its services.
58.com also began offering a mobile app called BonBon in the second quarter for paying members such as real estate agents to review the performance of uploaded listings and adjust their online marketing strategies. The app also enables the agents to interact with users looking for apartments.
The company forecasts revenue to reach between $41 million and $43 million in the fourth quarter.
Yao said he is looking at opportunities in overseas expansion, without disclosing details on which markets the company will expand in.
— With assistance by Lulu Chen