KWG Living Announces Proposed Listing on the Main Board of the HKSE

Offer Price at Between HK$7.0 to HK$8.13 per Share to Raise Gross Proceeds up to HK$3.117 billion and to Introduce a Number of Solid Cornerstone Investors

HONG KONG, CHINA – Media OutReach – 19 October 2020 – KWG Living Group Holdings Limited (“KWG Living” or the Company”, together with its subsidiaries, the “Group”, HKSE stock code: 3913), a comprehensive property management service provider in China today announces the details of the global offering (the “Global Offering”) and the proposed listing of its shares (the “Shares”) on the Main Board of The Stock Exchange of Hong Kong Limited (the “HKSE”).

The Global Offering is of a total of 383,384,000 Shares (the “Offer Shares”), comprising an international placing of 345,044,000 Shares, including 70,623,355 Reserved Shares under the Preferential Offering (Could be reallocated and Depends on whether the over-allotment option is exercised or not) (the International Placing) and a Hong Kong public offering of 38,340,000 Shares (Could be reallocated) (the “Hong Kong Public Offering”), representing approximately 90% and 10% of the total number of the Offer Shares respectively. The indicative offer price (the “Offer Price”) range is HK$7.0 to HK$8.13 per Share.

ABCI Capital Limited and Huatai Financial Holdings (Hong Kong) Limited are the Joint Sponsors of Global Offering. ABCI Capital Limited, Huatai Financial Holdings (Hong Kong) Limited, China International Capital Corporation Hong Kong Securities Limited, Credit Suisse (Hong Kong) Limited and Morgan Stanley Asia Limited are the Joint Global Coordinators of Global Offering. ABCI Capital Limited, Huatai Financial Holdings (Hong Kong) Limited, China International Capital Corporation Hong Kong Securities Limited, Credit Suisse (Hong Kong) Limited, Morgan Stanley Asia Limited (in relation to the Hong Kong Public Offering only), Morgan Stanley & Co. International plc (in relation to the International Offering only), BOCI Asia Limited, CGS-CIMB Securities (Hong Kong) Limited, CLSA Limited, CRIC Securities Company Limited, HeungKong Securities Limited are the Joint Bookrunners of Global Offering. ABCI Securities Limited, Huatai Financial Holdings (Hong Kong) Limited, China International Capital Corporation Hong Kong Securities Limited, Credit Suisse (Hong Kong) Limited, Morgan Stanley Asia Limited (in relation to the Hong Kong Public Offering only), Morgan Stanley & Co. International plc (in relation to the International Offering only), BOCI Asia Limited, CGS-CIMB Securities (Hong Kong) Limited, CLSA Limited, CRIC Securities Company Limited and HeungKong Securities Limited are the Joint Lead Managers of Global Offering.

The Group introduced a number of solid cornerstone investors (“Cornerstone Investor”), to subscribe for a certain number of Offer Shares with an aggregate amount of US$120 million. The cornerstone investors agreed that their shares purchased pursuant to their respective cornerstone investors agreement, are subject to the six months Lock-up period following the Listing Date. The cornerstone investors include Gaoling Fund, L.P and YHG Investment, L.P.(“Hillhouse Funds”), Orchid China Master Fund Limited and LMA SPC, Harvest Global Capital Investments Limited, Snow Lake China Master Fund, Ltd., The Valliance Fund , China Lesso Group Holdings Limited, Oscar and Partners Capital Limited, and Aspex Master Fund, of which Hillhouse Funds subscribed for approximately US$50 million, and other cornerstone investors each subscribed for US$10 million.

The net proceeds of the Global Offering, after deducting the underwriting commissions and other estimated expenses in connection with the Global Offering, are estimated to be approximately HK$2,755.5 million, assuming an Offer Price of HK$7.56 per Offer Share, being the midpoint of the proposed Offer Price range, and assuming the Over-allotment Option is not exercised. These proceeds are intended to be applied as follows:

• approximately 60% will be used to pursue strategic acquisitions and investment opportunities to further develop strategic alliances, expand business scale and increase market shares in residential property management service market and commercial and other non-residential property management and operational service market;
• approximately 25% will be used to upgrade the intelligent service systems in order to further enhance operational efficiency and service quality;
• approximately 10% will be used to further diversify value-added services;
• approximately 5% will be used for general business purpose and working capital.

KWG Living Group Holdings Limited is a comprehensive property management service provider in China, carrying the company philosophy of ”Careful Housekeeper”. KWG Living provide comprehensive property management services for both residential properties and commercial properties. Residential property management service segment comprises (i) pre-sale management services; (ii) property management services; and (iii) community value-added services, including (a) property agency services to property developers and property owners; (b) home-living services to property owners and residents; and (c) common area value-added services. The commercial property management and operational service segment comprises (i)pre-sale management services; (ii) commercial property management services; (iii) commercial operational services; and (iv) other value-added services, primarily including common area value-added services.

KWG Living focus on the development in the Greater Bay Area and the track record had grown rapidly. According to CIA, the Group was ranked 18th and 17th among the Top 100 Property Management Companies in China (中國物業服務百強企業) in terms of overall strength in 2019 and 2020 respectively. As of April 30, 2020, the total GFA under management of residential properties and commercial properties managed by the Group was 18.9 million sq.m. and 3.3 million sq.m respectively. These residential properties were located in 38 cities or autonomous country in China, including major cities such as Beijing, Shanghai, Chengdu and Suzhou. KWG Living has further penetrated the Great Bay Area. According to the industry consultant of the Company, Jones Lang LaSalle Corporate Appraisal and Advisory Limited (“JLL”), among the property management companies with commercial operational services, we were ranked seventh in China and fifth in the Greater Bay Area in terms of total GFA under management. In the Greater Bay Area, as of April 30, 2020, the group has a contracted construction area of 14.2 million sq.m, accounting for 41.2% of the total contracted construction area. The Group’s revenue increased from RMB 463 million in 2017 to RMB 1.125 billion in 2019, a compound annual growth rate of 55.8%, and net profit increased from RMB 44.15 million in 2017 to RMB 185 million in 2019 , The compound annual growth rate is 104.8%.

KWG Living has won well-recognized reputation and premium brought for its high quality service. The Group has won different awards, including the top 10 leading companies in terms of service quality among the 2020 Top 100 Property Management Companies in China (2020中國物業服務百強服務質量領先企業十強) by CIA, together with KWG Group, were awarded 2020 Top 100 Commercial Property Companies in China (2020中國商業地產百強企業) (ranked No. 8) in 2020 by CIA and a 2019 high growth commercial property enterprise (2019年度高成長商業地產企業) by linkshop.com (聯商網) etc. The Group believes that well-recognized market reputation will enhance the customer stickiness, also help to secure high-profile property management projects and enable to further grow business. In addition, customers are generally willing to pay a premium for quality services. According to the ranking of CIA, in 2019, among the top 10 leading property management companies in the Greater Bay Area, the group was ranked first in terms of revenue per sq.m. among the top 10 leading property management companies in the Greater Bay Area.

KWG Living commercial property management and operation business is advancing steadily. Meanwhile, the Group could also provide diversified services to cater to the needs of different customers. The Group have been provided commercial property management and operational services since 2006. The commercial property management and operational business targets mid- to high-end commercial properties, including office buildings and shopping malls. According to JLL, given the different customer base, management and operation of commercial properties typically yield higher service fees and profit margin in general, as compared to residential properties. Therefore, the Group has placed an emphasis on commercial property management and operational business, with an expectation that it will enhance financial performance and contribute to profitability of the Group. In addition to providing diversified property management services to residential and commercial properties, the Group also provides a series of value-added services, including second-hand property agency services for residential properties, household cleaning, maintenance, remodeled apartment design for elderly residents, and commercial property renovation, facility maintenance and leasing advertising space. The Group’s business portfolio has created a diversified source of income, which helps improve financial performance and increase customer loyalty.

The good development of KWG Living is benefited from the support of KWG group and the excellent experienced management. KWG Living was spun-off from KWG Group. KWG Group is a large-scale property developer which has further penetrated the Greater Bay Area and Yangtze River Delta Area with a strong focus on first-tier, new first-tier and second-tier cities. The land reserves of KWG Group and its continuous expansion will bring about steady support to the Group’s business. The extensive experience and strong management capabilities are key to the success of the Group. KWG Group not only has capable workforce, the Group also provide the employees with comprehensive trainings and established a talent pool management system to cultivate the employees.

Moreover, the Group utilized advanced technology to improve operational efficiency and customer experience. The Group has been utilizing “CoKWG” app to provide residents with services including entry control, repair and maintenance requirements. The Group has also installed various facilities in residential properties under management for developing a smart community, which can save labor cost while enhancing customer experience.

The Chairman, Non-executive Director and a Controlling Shareholder MR. Kong Jianmin said, “KWG Living has already built a strong foothold in the Greater Bay Area and will consolidate its leading position there. Having set its sights on building up its nationwide business presence, the Group will also seek to expand both its business and market shares in Yangtze River Delta, Midwest China and, Hainan and Bohai Economic Rim. KWG Living and KWG Group will also complement each other for mutual benefits based on their good and stable relationship. After it is spun off through a separate listing, KWG Living will have an independent platform for raising financing directly. The move will also be conducive to the expansion of its investor base and the improvement of the efficiency of its business operation and financial management.”

Executive Director, the Chief Executive officer and a Controlling Shareholder MR. Kong Jiannan said, “Residential property development as an industry has been growing on the back of China’s urbanization in the past several decades. This has generated a huge demand for residential property management. Specifically, the Greater Bay Area’s market for residential property management is booming. As a comprehensive property management service provider in China, KWG Living will continue to grow and further diversify into value-added services through acquisitions and strategic investments. It will also upgrade its intelligent systems to further enhance both the operational efficiency and customer experience. In the future, KWG Living expects its revenue to continue to grow on the back of the increasing gross floor area of properties under its management, its expanding geographical market coverage and its further diversified service portfolio.”

The Hong Kong Public Offering commenced at 9:00 am on Monday, 19^th October 2020, and is expected to close at 12:00 noon on Thursday, 22^nd October 2020. The results of allocation in the Hong Kong Public Offering and the Preferential Offering and the final Offer Price are expected to be announced on Thursday, 29^th October 2020. Dealings in the Shares on the Main Board of HKSE are expected to commence on Friday, 30^th October 2020, with 3913 as the stock code.

White Application Forms and prospectuses can be obtained from ABCI Securities Limited, Huatai Financial Holdings (Hong Kong) Limited, China International Capital Corporation Hong Kong Securities Limited, Credit Suisse (Hong Kong) Limited, Morgan Stanley Asia Limited, BOCI Asia Limited, CGS-CIMB Securities (Hong Kong) Limited, CLSA Limited, CRIC Securities Company Limited, HeungKong Securities Limited, and any of the designated branches of the receiving banks, including Hang Seng Bank Limited, Industrial and Commercial Bank of China (Asia) Limited, and Standard Chartered Bank (Hong Kong) Limited; or apply online via the White Form eIPO service at www.eipo.com.hk. Applicants can also instruct HKSCC to process their applications by using Yellow Application Forms or via electronic instructions.

(From left to right) KWG Living Group Holdings Limited Investor Relations Director Yu Jing, Chief Financial Officer Li Mingming, Executive Director and General Manager of the financial management center Yang Jingbo, Executive Director and Chief Executive Officer Kong Jiannan, Executive Director and General Manager of the residential property management department Wang Yue, human resources General Manager Kuang Xiaoling, General Manager of commercial department Cuiran

KWG Living Group Holdings Limited

Offer Statistics at-a-Glance