Ant Financial has led a $500 million investment in startup Danke Apartments, a Beijing-based co-living group.
According to Financial Times, Ant Financial joins existing investor Tiger Global Management in Danke’s third round of fundraising, bringing its total valuation to more than $2 billion.
The company will use the funds to upgrade its processing systems, which utilize algorithms that factor in location and other data to establish prices. Danke will also use the money to develop additional apartments for blue-collar workers.
Launched four years ago, Danke has apartments in cities such as Beijing, Shanghai and Shenzhen. Founder and CEO Gao Jing said in a statement that the company would continue to “respond to government calls to stabilize rent levels and promote healthy development of the rental market.”
But the startup has been criticized for the fact that it takes out “rental loans” in its tenants’ names, with the tenant then paying back the loan instead of paying rent. The catch is that the operators receive a year of rent from the loan and pay the landlords monthly, which allows the excess cash to be used to look for new rentals and expand business. In turn, tenants are burdened by the loan interest, essentially giving the operators free growth capital.
In February, Danke raised $100 million from a group of Chinese and foreign venture capital groups, including the Asia private equity arm of the German media group Bertelsmann.
This is just the latest investment for Ant Financial. In January, the company invested $40 million in FinTech lending company Akulaku. The investment comes as the company, which is owned by Alibaba and runs Alipay, is poised to expand its business beyond payments.
“Ant Financial, from day one, we are positioned as a tech company. But previously, we just wanted to make sure we are really using the tech to be innovative, to create examples, to redefine financial services that people can feel, can touch,” Ant Financial CEO Eric Jing said back in November.
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