Telstra buys China's SouFun

Australian telecoms giant Telstra has paid $254m to buy a controlling stake in Chinese website SouFun.com, the company announced today. 

SouFun is a news and information portal and business directory aimed at China's real estate sector and related markets.

An approximate transliteration of the Chinese words for 'house search', SouFun has tapped into a booming real estate sector and a growing home improvement market in the nation of more than 1.2 billion people.

Telstra now owns 51 per cent of the privately-held company's shares. A 30.9 per cent holding remains in the hands of SouFun founder Vincent Mo, who will stay on as chief executive.

SouFun has grown rapidly by purchasing several unprofitable real-estate sites from general portal operators in China, such as NetEase.com, and merging them to build a critical mass of users.

The site has attracted targeted advertising, and local media now describe SouFun as China's largest real estate portal.

Telstra expects the new subsidiary, which earns 60 per cent of its income from advertising, to generate pre-tax earnings of $14m in fiscal 2007, the China Daily reported. 

The newspaper also said that SouFun is planning an initial public offering on an overseas market this year, most likely in the US.