Chinese App Meituan raises $4.2 billion in IPO


(Photo: CGTN)

Meituan Dianping, Chinese online food delivery-to-ticketing services firm, raised 4.2 billion US dollars in the world's biggest internet-focused IPO in four years as it priced the float near the top of an indicative range, people close to the deal said.

Meituan, backed by Chinese social media and gaming firm Tencent Holdings, sold about 480 million primary shares, or 8 percent of its enlarged share capital, at 69 Hong Kong dollars (about 8.79 US dollars) each in the Hong Kong IPO, the sources said on Thursday.

That values the company at around 52.8 billion US dollars, taking into account shares to be issued under a pre-IPO employee stock ownership plan (ESOP), the people told Reuters.

The proceeds will help Meituan fortify itself against stiff competition from its main competitor, food-delivery platform which is backed by China's biggest e-commerce company Alibaba Group Holding. Both parties, in a bruising battle for market share, are offering heavy discounts to attract new customers.

Beijing-based Meituan declined to comment on the pricing.

The company set a price range of 60 Hong Kong dollars to 72 Hong Kong dollars per share on Aug. 31. It could raise as much as 4.85 billion US dollars in total if a 15 percent "greenshoe", or over-allotment option, is fully exercised after the shares begin trading.

Founded in 2010 by Wang Xing, Meituan which has been likened to US discounting platform Groupon Inc, completed in 2015 a 15 billion US dollars merger with its then main rival Dianping, akin to US online review firm Yelp Inc.

It offers a broad range of services including movie ticketing, food delivery, hotel and travel booking as well as ride-hailing.

The 69 Hong Kong dollars IPO price represents a multiple of 27 times its 2020 profit forecast by its underwriting syndicate, according to sources.

Meituan plans to mainly use the proceeds raised from the IPO to upgrade its technology, develop new services and products, and pursue acquisitions or investments in assets complementary to its business, according to its prospectus.

It would also focus on cementing its presence at home, instead of overseas expansion in the near future, chief executive Wang told a news conference in Hong Kong last week.

Meituan's shares will start trading on Sep. 20.

The company had lined up 1.5 billion US dollars from five cornerstone investors for the IPO including Tencent.

Meituan's float, the world's largest internet-focused IPO since Alibaba's 25 billion US dollars New York listing in 2014, is also Hong Kong's second multibillion-dollar tech float this year after Chinese smartphone maker Xiaomi Corp's IPO of 5.4 billion US dollars.

Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley are joint sponsors for Meituan's IPO.