Tencent-backed Meituan takes orders for US$4.4b IPO

This article first appeared in The Edge Financial Daily, on September 5, 2018.
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HONG KONG: Meituan Dianping has started to take orders for a Hong Kong initial public offering (IPO) that could raise as much as US$4.4 billion (RM18.25 billion) as it warned there was no guarantee it would ever become profitable.

The restaurant review and delivery giant, backed by Tencent Holdings Ltd, is offering 480.27 million new Class B shares at HK$60 to HK$72 apiece, according to terms for the deal obtained by Bloomberg yesterday.

Five cornerstone investors, including Tencent, have agreed to buy a combined US$1.5 billion of stock in the offering, the terms show.

Meituan’s IPO will bankroll its costly expansion into businesses from ride-hailing to finance as it pursues an ambition to become a super-app in the vein of Tencent’s own WeChat.

That sets it up for a clash with Alibaba Group Holding Ltd, which is spending billions to try and seize control of China’s US$1.3 trillion food delivery and online services industry.

In ride-hailing, Meituan is taking on Didi Chuxing, the start-up that defeated Uber Technologies Inc in China.

Tencent has committed to buy US$400 million of stock in in Meituan’s IPO, while Oppenheimer agreed to invest US$500 million, the terms show.

Darsana Capital Partners will purchase US$200 million of shares, while fellow hedge fund Landsdowne Partners agreed to invest US$300 million. The China Structural Reform Fund committed to purchase US100 million, the terms show. — Bloomberg