View:
March 26, 2019
Yi Duan
Chief Executive Officer
Fangdd Network Group Ltd.
18/F, Unit B2, Kexing Science Park
15 Keyuan Road, Technology Park
Nanshan District, Shenzhen, 518057
People's Republic of China
Re: Fangdd Network Group Ltd.
Amendment No. 1 to
Draft Registration Statement on Form F-1
Submitted March 5, 2019
CIK No. 0001750593
Dear Mr. Duan:
We have reviewed your amended draft registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Amendment to Draft Offering Statement submitted March 5, 2019
Notes to the Consolidated Financial Statements
(l) Deposits with real estate developers, page F-16
1. We note your response to comment 16. Please expand your response and
your disclosure
to elaborate on how you determined that the likelihood that a real
estate developer would
cause you to purchase any unsold properties under a Sales Commitment
Arrangement is
remote. Please address the following in your response and revised
disclosure:
Discuss the fact that you began entering into these Sales Commitment
Arrangements
Yi Duan
FirstName LastNameYi Ltd.
Fangdd Network Group Duan
Comapany2019
March 26, NameFangdd Network Group Ltd.
Page 2
March 26, 2019 Page 2
FirstName LastName
in 2016, and as such your experience with these types of contracts
is very limited and
explain how that factored into your analysis.
Explain how you considered the fact that the success of these
property sales is highly
susceptible to numerous factors outside of your influence,
including possible
contractions in the real estate market, changes to government
regulations, and
competition from similar projects.
We note that while some local government authorities have
implemented regulations
that prohibit real estate agencies from entering into cooperation
agreements with firm-
commitment clauses, you are not currently, and have not in the
past been, subject to
such regulations. Given your disclosure that you have not operated
in such areas,
explain why you considered this to be a factor in your analysis.
2. Please address the following with respect to your accounting for Sales
Commitment
Arrangements under ASC 606:
Please explain in greater detail how you determined that the two
promised services are
not separately identifiable and therefore not distinct for the
purposes of ASC 606-10.
Clarify for us how marketing properties through Sales Commitment
Arrangements
results in potentially higher returns for real estate developers.
Explain to us whether agents are entitled to their full share of the
sales commission at
the time a property sales contract is signed.
3. With respect to your arrangements with funding partners, explain to us
in greater detail
how you determined the actions taken by the funding partners represent
active
participation rather than due diligence prior to extending funding. In
that regard, please
elaborate on the funding partners participation in strategy and
marketing process and
explain to us how any disagreements during that process are resolved.
Finally, please
expand on the profit sharing basis set out in the Collaborative
Agreements. Your response
should include, but not be limited to, a discussion of how profit
sharing in a typical
Collaborative Agreement in structured, which party is paid first, and
whether any party
has the ability to cancel the arrangement and exit with a
predetermined amount.
(r) Revenue, page F-19
4. We note your response to our prior comment 18. Please provide us with
the following
additional information with respect to your analysis of the criteria
in ASC Topics 606-10-
55-36 through 606-10-55-40:
Your response indicates that the scope of services provided under
Properties Sales
Agreements are wider than those provided provided by the agents.
Please tell us what
additional services are provided to developers under the property
sales agreements and
the significance of the revenue attributed to those services
compared to agency
services. In your response, tell us whether multiple performance
obligations are
contained in your Properties Sales Agreements and the rationale
behind your
conclusion.
Tell us how, if at all, developers are able to interact with agents
either on, or outside
Yi Duan
Fangdd Network Group Ltd.
March 26, 2019
Page 3
your platform. In your response, tell us whether developers are
able to view
information about agents on your platform and select specific
agents to provide
services.
Explain to us whether the company enters into separate agreements
with agents at the
time of, or in anticipation of entering into a Properties Sales
Agreement with a
developer, or if agreements with agents are executed at the time
the agent registers to
use your platform.
Provide us with more information on how the commission rate
between the company
and the agents is determined. In your response, explain to us
whether a standard
commission is determined when an agent registers for your
platform, or whether a new
commission rate is negotiated whenever the company enters into an
agreement with a
developer.
Tell us how the company monitors the performance of agents.
In your response, you state that the Property Sales Contracts
obligate the company to
organize agents through the Company's platforms. Explain to us how
this obligation
equates to an obligation to provide agency services. Cite any
relevant sections of your
Property Sales Contracts in your response.
You may contact Eric Mcphee, Staff Accountant, at 202-551-3693 or
Robert Telewicz,
Accounting Branch Chief, at 202-551-3438 if you have questions regarding
comments on the
financial statements and related matters. Please contact Joshua Lobert, Staff
Attorney, at 202-
551-7150 or Sonia Barros, Assistant Director, at 202-551-3655 with any other
questions.
Sincerely,
FirstName LastNameYi Duan
Division of
Corporation Finance
Comapany NameFangdd Network Group Ltd.
Office of Real
Estate and
March 26, 2019 Page 3 Commodities
FirstName LastName