Chinese App Meituan Raises $4.2 Billion in IPO
September 13 2018 - 2:51AM
Dow Jones News
By Joanne Chiu and Liza Lin
Chinese startup Meituan Dianping raised about $4.2 billion from
its initial public offering in Hong Kong, according to people
familiar with the situation, defying a weak market to show
investors remain keen on fast-growing technology companies.
Meituan, backed by Tencent Holdings Ltd., caters to China's
growing middle class, which increasingly goes online for everything
from ordering lunch to booking cinema tickets. Its app offers
services similar to those of Grubhub Inc., Groupon Inc. and Yelp
Inc.
On Thursday, Meituan's fundraising priced near the top of its
target range, contrasting with a lackluster response to
smartphone-maker Xiaomi Corp.'s IPO earlier in the summer, which
ultimately raised $5.4 billion. It also came days after the city's
benchmark Hang Seng Index entered bear-market territory, falling
20% from a January peak, on worries about trade, Chinese growth and
a stronger dollar.
Beijing-based Meituan has yet to turn an annual profit but its
revenue more than doubled last year to about $5 billion. The
company raised 33.14 billion Hong Kong dollars ($4.2 billion) and
priced its offering at HK$69 ($8.79) a share, according to people
familiar with the situation. That price is in the upper half of an
earlier range of HK$60 to HK$72.
The deal gives the company a market capitalization of close to
$53 billion--a sharp increase from its $30 billion valuation during
a private capital raise in late 2017. The IPO was supported by
investors including Tencent and OppenheimerFunds. Hong Kong
billionaire Li Ka-shing also plans to purchase some of the shares,
according to a person familiar with the matter.
Meituan shares will start trading in Hong Kong on Sept. 20.
Meituan was formed in 2015 through a combination of two internet
startups. Its previous backers include Singapore's sovereign-wealth
fund GIC Pte Ltd. and U.S. travel portal Booking Holdings Ltd., the
company previously known as Priceline Group.
Goldman Sachs Group Inc., Morgan Stanley and Bank of America
Merrill Lynch are joint sponsors of Meituan's offering.
Separately, investment bank China Renaissance Holdings Ltd., an
adviser to various mainland startups including Meituan, set the
price range for its own IPO that could raise up to $377 million
ahead of its debut on Sept. 27.
The Beijing-based financial firm is selling about 85 million
shares at HK$31.80 to HK$34.80 apiece, according to a term sheet
seen by The Wall Street Journal. That would give China Renaissance
a market capitalization of up to $2.74 billion, before an option to
sell more stock.
Fan Bao, a former Credit Suisse and Morgan Stanley banker
originally from Shanghai, co-founded China Renaissance in 2005 and
is its controlling shareholder.
Alipay, China's largest mobile-payment system owned by Jack Ma's
Ant Financial Services Group, intends to purchase $50 million of
the firm's shares in the IPO, according to the term sheet. Other
cornerstone investors, who are meant to help support the offering,
include hedge-fund firm Snow Lake Funds, which has pledged $50
million, and private bank LGT Group, which will buy $25 million in
shares.
Write to Joanne Chiu at joanne.chiu@wsj.com and Liza Lin at
Liza.Lin@wsj.com
(END) Dow Jones Newswires
September 13, 2018 02:36 ET (06:36 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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