Tencent-Backed Pinduoduo Prices IPO at Top of Range
Chinese group-buying site Pinduoduo will price its U.S. initial public offering at $19 per American depositary receipt (ADR) to raise as much as $1.63 billion in one of the biggest flotations by a Chinese enterprise this year, a person close to the company told Caixin.
Pinduoduo, backed by social media giant Tencent Holding, priced the IPO at the top of a range between $16 and $19, according to its latest prospectus released July 17. The Pinduoduo flotation was oversubscribed by 20-fold from investors including Fidelity Investments and the sovereign funds of Abu Dhabi, the source said.
“The oversubscription would allow Pinduoduo to raise its IPO price by 20% to $22.80 per ADR, but the company founder Huang Zheng decided to price at $19,” the source said. ADRs are negotiable certificates issued by a bank that represent shares of a foreign company.
Launched in 2015 by ex-Google engineer Huang, Pinduoduo operates a bulk-buying business model similar to Groupon in the U.S. Huang, who is also chairman and CEO of Pinduoduo, holds 46.8% stake in the company, with 89.9% voting rights.
Pinduoduo said it would issue 85.6 million ADRs and will debut Thursday on the Nasdaq Stock Market. The company’s market cap would exceed $24 billion based on current pricing.
Three-year-old Pinduoduo is one of the fastest-growing companies in China’s thriving online shopping industry. It is noted for its “group purchase” model that encourages buyers of groceries, electronic devices and other goods to invite their friends to join in shopping to get discounts.
Bargain lovers flock to Pinduoduo to place orders, with an average order cost of slightly less than 40 yuan ($6), according to the prospectus.
The number of active buyers on Pinduoduo was 343.6 million by the end of June, surging from 295 million three months earlier, according to an April report by market researcher eMarketer. It is China’s third-largest e-commerce company in terms of sales, following Alibaba Group Holding Ltd. and JD.com Inc.
Pinduoduo posted revenue of 1.7 billion yuan in 2017, up from 505 million yuan the previous year. The company’s net loss widened to 525 million yuan in 2017 from 292 million yuan the previous year, according to prospectus.
Pinduoduo’s fast rise has also faced allegations that some products are fakes or substandard, which worries some market observers over its reputation and financial sustainability.
In April, the company raised more than $3 billion from investors that included Banyan Partners Fund, Tencent, IDG and Sequoia China.
Contact reporter Han Wei (firstname.lastname@example.org)
Apr 07 15:36
Apr 07 12:22
Apr 07 10:21
Apr 03 18:41
Apr 03 16:11
Apr 03 13:37
Apr 03 10:13
Apr 02 18:19
Apr 02 15:27
Apr 02 14:02
Apr 02 13:46
Apr 02 09:22
- 1China’s Asymptomatic Coronavirus Case Numbers Don’t Tell the Whole Story
- 2Huawei and ZTE Win Contracts to Build 200,000 5G Base Stations
- 3Wuhan’s Covid-19 Crisis Is Easing. Its Mental Health Issues Are Just Beginning
- 4In Luckin Debacle, Who’s to Blame for Missing Massive Fraud?
- 5In Depth: Why There Will Be No Quick Cure for Trade After the Pandemic
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas