[JD Says] Let’s Talk about Industries about Love on Valentine’s Day
The window is awaiting your leaning
The dressing mirror also laments
The room falls into silence
There comes a knock at the door, and you arrived
Willow leaves wave, spring water disturbed
Flying bird, jumping fish, green mountain, white cloud
Wrinkle on sleeves
All that needed is your right foot’s step
——No Title by Bian Zhilin
“Unexpected happiness can only be found in romantic plots in Korean TV series. A girl has to rely on herself to find her Mr. Right.” Such words are commonly seen in many articles published in WeChat public accounts. The underlying realistic attitudes and social needs have provided a living environment for various kinds of platforms and APPs in China’s dating market.
Since 1998 when the first dating site was founded in China, the online dating market has developed for nearly two decades. For urban youth nowadays, the one that may bring pleasure to their spirit may just be waiting for you at the other side of the APP with a mobile phone in hand.
Market competition intensifies in “online dating”
According to the “2016 Industry Report of Online Dating in China” released by iResearch, among the mobile APPs launched by core enterprises engaged in online dating services, two echelons remarkably excel in terms of total hours of using per month. Jiayuan.com stays in the first tier, closely followed by Youyuan.com, Baihe.com and Zhenai.com. Intensified competition propelled them to continuously find their new value from platform innovation, services and marketing. For instance, focusing more on human, Jiayuan.com adopted the outsourcing mode, initiated the Matchmaker Agent Project, and made part-time matchmakers as a part of its system. Baihe.com looked at AI and developed the “Trial Love” robot, with which the singletons can know their own preference.
These all further aggravated competition in the “online dating” market, and pushed forward industrial M&A. In May 2016, Jiayuan.com declared the completion of its merger with Baihe.com. The former delisted from the US stock market and became an indirect wholly-owned subsidiary of the latter. Following this merger, the new platform became the one with the highest number of users in the market.
Getting involved in the M&A of Jiayuan.com and Baihe.com best explains the logic of JD Capital’s TMT investment. As the industry grows and matures, JD Capital comprehensively uses PIPE and other tools to seize new opportunities in the industry by means of M&A investment.
Forging market leaders in the dating and wedding industry
Early in market development of online dating in China, online dating platforms such as Jiayuan.com and Baihe.com successfully transferred marriageable people’s habit of offline dating to PC-based online dating. The relatively focused market was once deemed as a minor one with a market value of “no more than 3.5 billion”. However, as seen by JD Capital, if the industry can be integrated through M&A, and that industrial bellwethers can get rid of internal friction caused by competition, greater progress can be achieved. Meanwhile, following integration, industrial bellwethers will be capable of fully tapping into market potential and extending the industrial chain, thus gaining more value through cross-industrial operation. On this account, JD Capital helped Baihe.com join hands with Jiayuan.com, and carried out the most significant M&A to date in the industry of “online dating”.
In May 2016, when Jiayuan.com announced its privatization, it had been nearly a year since JD Capital made its first quotation in June 2015. During this period, as an investor, JD Capital also experienced twists and turns. After the plan was revised for dozens of times, JD Capital finally turned from an initiator of the tender offer of Jiayuan.com into an investor of Baihe.com. Baihe.com became the subject of the privatization of Jiayuan.com.
Jiayuan.com takes a prominent position in the industry and has high profitability. When JD Capital launched the privatization offer in 2015, China Concept Stocks were just about to return in batches and the valuation Jiayuan.com in US stock market was at a relatively low ebb. If Jiayuan.com could return to the onshore market after privatization, the valuation level would be higher. However, when JD Capital finally contributed to this deal, it weighed industrial integration over the simple logic of inter-market arbitrage. “The reason we promote the M&A between Jiayuan.com and Baihe.com is for the relatively high synergy effect between the two, as their major businesses are complementary. Besides, with reduced intensity of industrial competition, the financial conditions of both sides were improved,” introduced by the responsible person of JD Capital’s TMT team.
The M&A between Baihe.com and Jiayuan.com went beyond many people’s expectation. First, it is the first case where an NEEQ-listed company (Baihe.com) acquires a listed company on NASDAQ (Jiayuan.com); second, since the size of Baihe.com is smaller than that of Jiayuan.com, it is just like throwing a sprat to catch a herring. Tian Fanjiang, founder of Baihe.com, thinks of the following key points in the successful implementation of M&A: First, by taking full advantage of the NEEQ market, Baihe.com soon acquired abundant capital after being listed. Second, the enterprise performed well in the construction of the industrial ecological cycle. Baihe.com carried out such strategy at the right time, and expanded its business scope from dating to subsequent procedures of wedding preparation and relationship consulting, which was widely recognized by domestic investors.
Industrial integration helps complete the whole wedding industrial chain
For enterprises, quality capital not only helps them achieve short-term goals such as going public, but also contributes to their real and long-term development. In recent years, JD Capital puts forward a 2.0 post-investment management strategy, with a view to getting deeply engaged with leading investees and further supporting the enterprises to grow via M&As and other methods.
The M&A cooperation between Baihe.com and Jiayuan.com created a new platform for JD Capital to implement such a strategy. Research reports show that with this M&A, Baihe.com and Jiayuan.com jointly secured around 50% share of the “online dating” market, and soon developed into the downstream of the industrial chain. JD Capital helped them step into the wedding market and carry out M&As with relevant enterprises. So far, while making its layout along the wedding industrial chain, Baihe.com has also entered the real estate industry and designed single apartments themed on love affairs.
“Reaching a 10-billion market value depends on the industry itself, and reaching a 100-billion market value depends on capital and M&A. JD Capital will help Baihe.com to take the lead in the wedding market and realize its dream of increasing its market value from nearly 10 billion to over 100 billion. Baihe.com, leader of the whole wedding industrial chain, has set sail. In the future, JD Capital will join hands with Baihe.com as its capital partner,” said the responsible person of JD Capital’s TMT team.
Extensive reading: what are JD Capital’s investees busy with on Valentine’s Day?
Baihe.com: No flower, only money
On the Valentine’s Day, the official WeChat account of Baihe.com set an eye-catching activity themed on “No flower, only money”, aiming to publicize Huilicai, its wealth management product. From February 9, 2017 to March 9, 2017, a red packet of 60 yuan, plus one-month senior membership of Baihe.com, will be given as a reward for each 21,400 yuan of added investment.
Cheeris: Inexpensive yet sweet gifts
Prior to the Valentine’s Day, the official WeChat account of Cheeris gave readers gift-giving strategies and launches its latest spring releases in the meantime. These include three bright and shining hair accessories in the elegant butterfly shape, special feather shape and classic diamond shape respectively, and such cosmetics as true-color lip gloss, auto-shaping eyebrow pencil, mousse cushion blush, and lash-curling mascara. Costing 100 to 500 yuan, these products can be quite inexpensive yet sweet gifts for every lover.
Fusen-Noble House: Have high quality, or have nothing
While Cheeris offers nice small gifts, the official WeChat account of Fusen-Noble House features “big ones”. The Valentines gift it recommended is Agresti safety box, as with artistic appearance and exquisite design, it can perfectly indicate that love needs to be treasured and cared for. Besides, it also introduced ETRO, a high-end brand of home textiles. ETRO, meaning “style” in Italian, represents a kind of lifestyle, aesthetic feeling expressed by its quality and taste, and also a typical Italian way of high-quality life.
- Jiuding Group
- JT Asset Management
- JX AMC