By Joanne Chiu 

China's Meituan is raising as much as $10 billion from investors, hoping that it will be able to gain an edge on its e-commerce rivals by spending heavily on technology allowing it to deliver goods using drones and self-driving cars.

Meituan is one of China's most valuable tech companies. Its app lets users order various real-world services including meals and groceries, as well as organizing bookings for hotels, flights, taxis and restaurants.

The Hong Kong-listed company is selling as much as $7 billion of stock and $3 billion of convertible bonds, according to a term sheet Monday that was seen by The Wall Street Journal. Meituan declined to comment.

The huge capital-raising is considerably bigger than the $4.2 billion Meituan raised in its 2018 initial public offering and suggests there is still a healthy appetite among investors for stock in Chinese technology companies, even though shares in Meituan and many peers have pulled back recently.

Earlier this month, Prosus NV raised $14.6 billion by selling down a small part of its stake in Tencent Holdings Ltd., the internet and videogaming giant.

Meituan plans to use some of the net proceeds on projects such as researching and developing autonomous delivery vehicles, drone deliveries and other cutting-edge technology, the term sheet said.

In a separate statement Monday, the company unveiled a new generation of self-driving delivery cars that it said were smarter and safer than previous versions, with a longer battery life and capable of carrying heavier loads. Meituan says it has been working on this technology for five years, and began making deliveries in a district of Beijing last year. It plans to roll out the service to other Chinese cities within three years.

The company is raising as much as $7 billion by selling shares to institutional investors and to Tencent, the term sheet said. Tencent, which owns about 7.6% of Meituan, has pledged to buy as much as $400 million of stock. Meituan will also issue $3 billion of zero-coupon convertible bonds due in 2027 and 2028.

Meituan had an operating loss of 2.9 billion yuan, equivalent to $445 million, in the fourth quarter, compared with an operating profit of 1.4 billion yuan a year ago. While revenue for the quarter rose nearly 35% to 37.9 billion yuan year on year, Meituan said it had made significant investments in new initiatives and warned investors it could continue to record operating losses in the next few quarters as it ramps up its group-buying business.

Meituan and rivals such as Pinduoduo Inc. are jostling for market share in group buying, a fast-growing form of e-commerce in China in which people join together to buy groceries in bulk at better prices.

Meituan's stock hit record highs in February. But the stock has since fallen about 36% amid a broader selloff in Chinese technology stocks that has been driven partly by concerns about a tougher regulatory environment.

On Monday, Meituan's shares closed 0.3% lower at 289.20 Hong Kong dollars a share. The price range for the stock offering is HK$265 to HK$274, representing a discount of as much as 8.4% compared with Monday's closing price.

Write to Joanne Chiu at


(END) Dow Jones Newswires

April 19, 2021 10:03 ET (14:03 GMT)

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