Ganji receives $200m investment

Global alternative asset manager the Carlyle Group LP and fund company Tiger Fund have invested more than $200 million in Chinese online and mobile-based classified advertising operator Ganji Inc, aiming to profit from the nation's expanding e-commerce sector.

Carlyle said it took a minority stake in Ganji without giving further details.

"Ganji is well-positioned to benefit from urbanization, digitalization of services, high demand for online classifieds and local services, an enormous Internet and mobile Internet user base as well as an increasingly sophisticated e-commerce culture," Eric Zhang, a managing director of The Carlyle Group, told China Daily.

Zhang said the firm will support Ganji's product innovation and development in online-to-offline local services with its funds and expertise in the Internet and consumer sectors.

The O2O sector, also known as offline e-commerce, allows Internet users to see information about discounts on websites, which encourages them to visit brick-and-mortar stores rather than virtual outlets.

"This is a time of explosive growth for the classified information market, and the partnership with investors will help us move faster," said Yang Haoyong, founder and chief executive officer of Ganji, at a media briefing in Beijing.

The online classified market in China is expected to grow from $275.4 million in 2012 to $2.4 billion in 2017, and online classifieds as a percentage of total classifieds will increase from 10.6 percent in 2012 to 43.9 percent in 2017, according to iResearch Consulting Group.

Yang said that "2015 will be the year we go public."

According to Yang, the company's main business sectors are job postings, housing ads, life services and vehicle transactions. Revenue from job ads will exceed 700 million yuan in 2014, Yang said.

Established in 2005, Ganji offers a wide range of listings in many categories for more than 350 cities in China.

Ganji received funding from the Ontario Teachers' Pension Plan and Macquarie Group Ltd totaling $90 million in 2012.

The previous year, it completed its C-round financing of $70 million from Shanghai-based Capital Today and Sequoia Capital LLP from the United States.

Its B-round financing of $20 million came from Nokia Growth Partners and BlueRun Ventures in 2010. BlueRun Ventures made the A-round financing of $8 million in 2009.

Another online marketplace, 58.com Inc, is China's largest such company measured by monthly unique visitors. It went public on the New York Stock Exchange last October.

First-quarter revenue of 58.com was up 103.3 percent to $48.2 million. It generates revenue primarily from memberships and online marketing services.

The online classified market "is a winner-take-most market because it is characterized by the 'network effect'," said a vice-president of a leading global venture capital firm who declined to be identified.

The network effect, or network externality, is the effect that one user of goods or services has on the value of those products to other people.

He said it is essential for an operator in the online classified market to satisfy the requirements of users and provide a good user experience.