Pinduoduo aims to raise more than US$1 billion in secondary offering

The company’s growth has been costly, but more aggressive expansions are in the works.

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A little more than two weeks have passed since the lockup period for Pinduoduo’s (PDD) shares expired. The Chinese group-buying platform is now seeking to raise more than US$1 billion through a secondary offering. Banyan Partners, Lightspeed China, and Sequoia are among the shareholders that are looking to offload their shares.

The Nasdaq-listed company will be selling 37 million American depository shares, while investors will put 14.8 million shares on the market, according to Bloomberg citing PDD’s securities filings. Underwriters could invoke an option to buy more shares, potentially bringing in an additional US$150 million.

PDD’s stock price has increased by 35% this year, giving the company a market valuation of about US$34 billion.

The Shanghai-based e-commerce company intends to put these funds toward its expansion. In a letter to shareholders, PDD founder Colin Huang justified the move by writing that the company “might appear too aggressive or too conservative at times. However, it always follows the basic and simple principle—growing its long term intrinsic value.”

PDD is already a household name in China, and the company does much of its business beyond the country’s top-tier cities such as Shanghai and Beijing. The platform blends commerce with entertainment, and embeds its services on Tencent’s WeChat platform. PDD went public after three years of operation. In November 2018, it posted 697% year-on-year growth in revenue. This year, its revenue is projected to more than double from 2018’s US$1.9 billion to US$4.1 billion.

Editor: Brady Ng