Nov. 15 (NBD) -- Renren Inc. (Renren), which operates a social networking service (SNS) business, used car business and SaaS business, announced Tuesday that its wholly-controlled subsidiary Beijing Qianxiang Wangjing Technology Development Co., Ltd. has agreed to sell all tangible and intangible assets in www.renren.com and its related Renren SNS business to Beijing Infinities Interactive Media Co., Ltd. (Beijing Infinities) for a cash consideration of 20 million U.S. dollars.  

Also in consideration and as part of the foregoing asset sale, Beijing Infinities' parent entity Infinities Technology (Cayman) Holding Limited has agreed to issue shares with a value of 40 million U.S. dollars to Renren based on an agreed-upon estimated valuation of the buyer's parent company at 700 million U.S. dollars. 

Photo/Dfic

Viewed as Facebook of China by many people, renren.com (formerly known as Xiaonei.com) was launched in 2005 by entrepreneur Wang Xing and targeted university students aged 18-24. Wang Xing currently serves as CEO of China's largest on-demand services platform Meituan-Dianping.

Xiaonei.com soon took off, but was sold to Oak Pacific Interactive a year later due to a failed financing plan. In 2009, Oak Pacific Interactive renamed the acquired site renren.com. 

In May 2011, Renren got listed on the New York Stock Exchange (NYSE). On the first day of trading, Renren realized a market cap of more than 7 billion U.S. dollars and became the third largest listed Chinese Internet company, just behind Tencent and Baidu. That was the social networking platform's prime period. Since the listing, the company has been on a downhill slide. It closed on Tuesday (U.S. time) at a valuation of only 105 million U.S. dollars. 

According to a fiscal report published in September, Renren produced 135 million U.S. dollars in operation revenue for the second quarter of this year, up 582 percent from a year earlier. The growth was primarily boosted by the used car sale business, which generated a revenue of 122.7 million U.S. dollars and contributed up to 90.9 percent to the company's total.

This also reflects that the Renren SNS service was fairly stagnant. Mr. Joseph Chen, Renren's Chairman and Chief Executive Officer, said in a previous media interview this year that renren.com had lost to the development trends.

Reasons behind include the failure to grab the enormous opportunities brought by the rise of mobile technologies, a narrow customer base, and ineffective team management and operations. 

Among all Internet-related niche sectors in China, social networking products saw replacement most frequently. There is strong demand for social networking, whereas every generation of social networking tools has failed to meet fully the needs of customers and there leaves room for further development, Liu Xingliang, head of the DCCI internet research institute, explained to news outlet Yicai. 

In Renren's statement released Wednesday, Chen said, "Looking ahead, our company will be serving global, vertical industries with internet and artificial intelligence."

Renren believes the asset sale is the most viable path to dispose of its Renren SNS business and to set Renren onto its next phase of growth. With the consummation of this transaction, the company will focus on its used car business in China as well as its businesses outside China, notably the Trucker Path business and the SaaS business in the U.S., Renren stated. 

Renren intends to remain listed on the NYSE.

It is noticeable that a minority shareholder of Beijing Infinities is Oak Pacific Holdings, a company controlled by Mr. Joseph Chen and Renren's executive director and Chief Operating Officer Mr. James Jian Liu.  

Email: lansuying@nbd.com.cn