Meituan-Dianping Moves Toward Hong Kong Listing

China’s largest online local services platform Meituan-Dianping is likely to join the expected rush of the country’s tech giants to go public in Hong Kong this year, as the city relaxes rules to attract more high-tech listings, sources close to the matter told Caixin.

Meituan-Dianping is planning an initial public offering (IPO) on Hong Kong’s stock exchange by the end of this year, although discussions on the matter are still at a preliminary stage, sources said. The company hasn’t finalized underwriters.

Meituan-Dianping declined to comment on the matter.

Meituan-Dianping was formed in 2015 after a merger of leading group-buying platform Meituan and restaurant reviewing site Dianping. The company has since expanded into a wide range of services including ticket booking, food delivery and ride-hailing services.

Meituan-Dianping posted 33 billion yuan ($5.2 billion) in revenue last year, with 320 million active users and 4.4 million merchants tapping its platform.

In its latest round of financing in October to raise $4 billion, Meituan-Dianping was valued at $30 billion, making it one of China’s most valuable tech unicorns — startups valued at more than $1 billion.

Its latest expansion is into ride-hailing services, challenging industry leader Didi Chuxing.

It's already rolled out its service in Shanghai and Nanjing, and plans to be in at least seven Chinese cities including Beijing. Meanwhile, Meituan-Dianping also made its foray into the overseas market this year by investing in Indonesian ride-hailing startup Go-Jek and India’s biggest food delivery platform Swiggy.

In an earlier interview with Caixin, Meituan-Dianping’s Wang Huiwen said the company was not in a rush to list. An industry analyst also said Meituan-Dianping would focus more on business expansion rather than going public at current stage.

But the company apparently decided to go ahead due to Hong Kong’s coming relaxed listing rules to entice more high tech companies to float.

The Hong Kong Exchanges & Clearing Ltd. (HKEX), the operator of the Hong Kong bourse, is set to amend its listing rules to accept companies with dual-class shares as well as biotech companies not yet profitable as early as late April.

Leading smartphone maker Xiaomi Inc., valued at $46 billion in latest fundraising, is preparing a Hong Kong IPO this year. Sources said Xiaomi wants to become the first company with non-traditional share structure to list in Hong Kong.

Regulators on the Chinese mainland are also studying measures to make it easier for tech startups and giants to list at home. One option under study is the issuance of China Depositary Receipts (CDR), similar to American Depositary Receipts (ADR), which would allow Chinese overseas-listed companies to trade their shares on the domestic A-share market.

Caixin has learned that e-commerce giants Alibaba Group Holding Ltd. and JD.com Inc. are to become the first companies to make secondary listings on the mainland market through the use of CDR issuance as early as June.

Xiaomi has also agreed to list some of its shares on the mainland market through a CDR issuance, sources told Caixin said.

When asked by Caixin in a recent interview about a possible A-share listing, Wang Xing, Meituan-Dianping’s chief executive, said the company is following the planned securities market reform, but “there are still many uncertainties in the details.”