Fangdd to issue $34.3 million convertible note in private placement

SHENZHEN, China - Chinese property technology company Fangdd Network Group Ltd. (NASDAQ:DUO), currently trading at $2.32 and showing signs of undervaluation according to InvestingPro analysis, announced Friday it has entered into a convertible note purchase agreement for $34.32 million through a private placement. The company, with a market capitalization of $9.33 million, maintains a healthy balance sheet with more cash than debt.

The note will be issued to satisfy payment obligations under an asset purchase agreement dated September 29, 2025, according to a company press release. The transaction remains subject to customary closing conditions. InvestingPro data shows the company’s current ratio stands at 1.66, indicating sufficient liquidity to meet short-term obligations.

The convertible note will mature in 364 days after issuance without bearing interest. Prior to repayment, the note holder can convert it into Class A ordinary shares at a conversion price of $1.0409. If not converted earlier, the outstanding principal will automatically convert into shares on the maturity date.

To maintain a stable corporate structure following potential conversion, Fangdd also entered into a share subscription agreement with ZX INTERNATIONAL LTD, a company controlled by Xi Zeng, Fangdd’s chairman and CEO. Under this agreement, Fangdd may issue up to 12,731 Class C ordinary shares if it receives a conversion notice from the note holder.

The purchase price for these Class C shares will be calculated based on the average closing price of Fangdd’s Class A ordinary shares for the 15 trading days prior to the closing notice date.

The company stated that the issuance of the note and potential shares is exempt from registration under the Securities Act of 1933 as it involves transactions not requiring public offering.

Fangdd describes itself as a customer-oriented property technology company in China that focuses on providing real estate transaction digitalization services. Despite revenue growth of 48.3% in the last twelve months, InvestingPro analysis reveals challenging operational metrics, with an EBITDA of -$17.81 million. Subscribers can access 12 additional ProTips and comprehensive financial analysis on the platform.

In other recent news, Fangdd Network Group Ltd. has announced its agreement to acquire artificial intelligence technology assets for $34.32 million. This acquisition involves purchasing from an unnamed British Virgin Islands company. The transaction is part of Fangdd’s strategy to enhance its technology-enabled real estate management capabilities. Additionally, the agreement includes potential earnout payments, which are contingent upon the company’s revenue growth through 2027. These payments would be made in Class A ordinary shares. This move reflects Fangdd’s commitment to integrating advanced technology into its operations. Such developments highlight the company’s focus on leveraging AI technology for future growth. Investors may want to monitor how this acquisition impacts Fangdd’s operational strategy.

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