Meituan said to raise US$4.2 billion in latest big tech IPO

Menu icons are displayed on the Meituan application on an Apple Inc. iPhone in an arranged photograph taken in Hong Kong, China, on Thursday, Sept. 6, 2018. (Bloomberg pic)

HONG KONG: Meituan Dianping raised about US$4.2 billion after the Chinese food review and delivery giant priced its Hong Kong initial public offering near the top of a marketed range, according to people with knowledge of the matter.

China’s second largest tech startup priced its sale of 480.27 million new Class B shares at HK$69 apiece, the people said, asking not to be identified because the information is private. That price tag, compared with an offer range of HK$60 to HK$72, values Meituan at roughly US$48 billion, according to Bloomberg’s calculations.

Meituan is among the largest of a new generation of internet giants that’s challenging the longstanding dominance of Tencent Holdings Ltd. and Alibaba Group Holding Ltd. Its IPO is said to have attracted personal investments from Li Ka-shing, Hong Kong’s richest man, as well as Thomas Lau, chairman of department store operator Lifestyle International Holdings Ltd. The company, which is backed by Tencent, plans to begin trading Sept. 20.

Goldman Sachs Group Inc, Morgan Stanley and Bank of America Corp are joint sponsors for the offering, while China Renaissance Holdings Ltd is the sole financial adviser, the prospectus shows. A representative for Meituan declined to comment on the pricing or its valuation.

Meituan’s IPO is the second largest tech debut Hong Kong’s ever seen, but it attracted less excitement from individual investors than other large listings from the industry. The company’s 5.49 billion shares, as spelled out in its prospectus, will grant it a valuation of just under HK$378.8 billion (US$48.3 billion).

It’s been trying to get investors to focus on its rapid top-line expansion, in the tradition of Inc. and other fast-growth firms that bled money for years. It remains to be seen if the market will overlook its significant spending over the longer term.

Chairman Wang Xing is pursuing an ambition to transform his company into a super-app in the vein of Tencent’s own WeChat, providing everything from digital payments to travel-booking and bike rentals. That entails a costly expansion that pits it against Alibaba in particular. The latter is spending billions to try and seize control of a US$1.3 trillion Chinese food delivery and online services industry.

Meituan, however, has shown a willingness to rein in spending to pad the bottom line, such as by icing an expensive foray into car-hailing.