Web Directory Service 2345 Selling 38% Stake at A Valuation of RMB2 billion ($325 million)

Web Directory Service 2345 Selling 38% Stake at A Valuation of RMB2 billion

By Tracey Xiang on August 12, 2013

ZHEFU (SZ:002266), a Chinese hydropower equipment company,  announced to acquire a 38% stake in 2345.com, a Web directory and browser provider, for RMB760 million ($124 mn) (statement in Chinese). Thus 2345 is at a valuation of RMB 2 billion ($325mn). ZHEFU will invest in no more than RMB650 million and its biggest shareholder Sun Yi will input no less than RMB110 million, according to the statement. The stake sold will be from Pang Dongsheng, who currently owns 46.2% of 2345. As of July 2013, 2345 had 30 million users of the directory site and 10 million browser users. The company made RMB139 million in revenue and RMB 15.93 million in profit in 2012. The total revenue for the first half of this year is RMB210 million with RMB33.14 million in profit. 2345.com was once the second largest Web directory site in China, only after Hao123.com which was acquired by Baidu in 2004 for RMB 50 million cash and some Baidu shares. It is believed that Hao123 once drove about 30% of Baidu’s revenues through paid listing and the Baidu search box placed on it. Qihoo’s hao.360.cn later surpassed 2345.com. Qihoo successfully channeled users of its free security service to the browsers developed in house where hao.360.cn is set as the default landing page. Monthly active users of Qihoo 360′s browsers was 332 million and average daily unique visitors to hao.360.cn were 94 million as of March 2013, according to Qihoo’s Q113 financial report. All the revenues of Qihoo’s are generated through the browsers and the landing page. More than a few Chinese companies, such as Sogou and 2345, followed the business model.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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