YELP Yelp Inc

By Joanne Chiu and Liza Lin 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 14, 2018).

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 to do things as diverse as ordering lunch and 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 (US$4.2 billion) and priced its offering at HK$69 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 Inc., 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 as much as $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 as much as $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, which is 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, which are meant to help support the offering, include hedge-fund firm Snow Lake, 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 14, 2018 02:47 ET (06:47 GMT)

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