Briarwood Adds To Zhong Ao Home Group

Briarwood Capital Partners (Briarwood) recently added to their stake in HK-listed Zhong Ao Home Group (Zhong Ao). According to a filing made to the Hong Kong Stock Exchange on March 23rd, 2017, the firm purchased 578,000 shares on the exchange at an average price of HKD 1.16 per share on March 22nd (total consideration was ~US$86,000). Following the purchase, Briarwood’s stake in Zhong Ao increased from 7.97% to 8.04% of the company’s shares outstanding.

Zhong Ao’s core business offers property management services in China. The industry is currently very fragmented but analysts expect to see increased consolidation going forward. Zhong Ao is an independent player backed by Vision Knight Capital, which is run by CEO David Wei. Most of the company’s competitors have been spun out of property developer firms. For example, listed competitors in Hong Kong include Colour Life (spin-off from Fantasia) and China Overseas Property Holdings (spin-off from China Overseas Land & Investment).

Zhong Ao also has a small but fast growing online-to-offline tech platform called Aidaojia. The platform allows users to purchase groceries and home services from local merchants as well as carry out basic property management tasks (e.g. paying fees, reporting issues and so on). As of June 30th, 2016, the platform had ~465,000 registered users, ~2,800 signed merchants and total coverage spanning ~4,600 residential properties.

Briarwood is focused on concentrated, long term investing in emerging and frontier markets. The fund was founded (and is currently run) by Aalap Mahadevia who previously worked at Tiger Consumer Management, Farallon Capital and Leucadia National. The link to their website can be found here.