Meituan tests investor interest ahead of September IPO, aims for $4b

Meituan takes another step forward to its imminent HK IPO.

Kr-Asia Photos: Photo credit: KrAsia

Meituan-Dianping, a Beijing-based on-demand services app, has reportedly started its pre-deal investor education process to gauge investors’ appetite for its upcoming initial public offering (IPO) at the Hong Kong Stock Exchange, set for September 20th.

Tencent, China’s social media and gaming behemoth, is looking to up its 20% stake into Meituan-Dianping by purchasing $400m worth of shares as one of its cornerstone investors for this IPO, people close to the matter told Bloomberg.

The Chinese on-demand platform operator wants to raise more than US$4 billion at a valuation of $50-55b, according to the report. This is approximately an 8% decline from the initial proposed $60b valuation.

Takeaways

– Meituan’s financials don’t look great. Its IPO filings show ballooning losses of RMB 19 billion (US$2.8 billion). Meanwhile, it continues facing a bloody battle in the food delivery space ever since Alibaba merged with Ele.me and Koubei.

– Meituan is seeing signs of declining valuation which might put a limit on the amount it is looking to raise, similar to the case of Xiaomi which saw its proposed valuation fall by close to half from US$100b to US$54b.

– The upcoming IPO also comes at a time Chinese tech giants are facing greater public scrutiny. The lacklustre investor interest in Xiaomi’s IPO and Pinduoduo’s counterfeit controversy are just some cases in point, in addition to the ongoing Sino-US trade war that might further reduce investor appetite.

Editor: Nadine Freischlad