Meituan Dianping Closes Up 5% in Hong Kong Debut in Second-largest IPO Since Xiaomi
The Tencent-backed delivery and services platform landed a $4.2 billion IPO, trailing closely behind Xiaomi's July listing.
Tencent-backed Meituan Dianping (HKEX: 3690) enjoyed a strong debut in Hong Kong Thursday, raising $4.2 billion in the second-largest tech listing on the stock exchange after Xiaomi this year.
Meituan, China's leading online marketplace for services including food delivery and ticker bookings, closed at HK$72.35 per share on its debut day, up 5 percent from its offering price of HK$69. The company's market value reached $50.9 billion by day's end.
The co-founder and chief executive of the platform, 39-year-old Wang Xing, saw his wealth soar to $5.3 billion on the day.
The listing in Hong Kong was the second multibillion-dollar tech float and second to list with weighted-voting rights in 2018 since Xiaomi Corp.'s (HKEX: 1810) IPO in July. The Chinese smartphone maker closed a $4.72 billion deal, though it initially expected to raise up to $10 billion, split between Hong Kong and mainland China. Today, Meituan's market value has exceeded that of the smartphone maker, as reported by Bloomberg.
Founded in 2010, Meituan, which has been likened to U.S. discounting platform Groupon Inc. (Nasdaq: GRPN), completed a $15 billion merger in 2015 with its then main rival Dianping, which is similar to U.S. online review platform, Yelp Inc. (NYSE: YELP).
Meituan handled $57 billion of transactions last year among about 320 million active buyers and more than 4 million merchants. With revenue doubling last year, the company lost about $430 million.
The platform offers a broad range of services including movie ticketing, food delivery, hotel, and travel booking, as well as ride-hailing, battling fierce competition from two other Chinese giants, Alibaba Group Holding Ltd. (NYSE: BABA) and Didi Chuxing.
Meituan has been backed by Chinese social media and gaming titan, Tencent Holdings Ltd. (HKEX: 0700), which has committed $400 million to its IPO. Other key investors were global asset manager Oppenheimer & Co. Inc., UK-based hedge fund Lansdowne Partners, U.S. fund Darsana Capital Partners LP, and state-backed China Structural Reform Fund.
Meituan plans to use the proceeds raised from the IPO mainly to upgrade its technology, develop new services and products, and pursue acquisitions or investments in assets complementary to its business, according to its prospectus.
The float comes as Alibaba is beefing up Ele.me's war chest at a time when the cost of expanding in China's food delivery market is rising sharply.
(Reuters contributed to this article)