It’s been a busy last week for Pinduoduo (Nasdaq: PDD) and it is now looking to raise more capital.
One of China’s top online retailers said in a statement Monday aftermarket that it is offering $1.75 billion in senior convertible notes. The company plans to offer underwriters a 30-day over-allotment option to purchase an additional $250 million, bringing potential proceeds to around $2 billion.
Simultaneously, in conjunction with the notes, PDD is offering an aggregate of 22 million American depositary shares. Underwriters will likely have a 30-day option to buy up to an additional 3.3 million shares.
Goldman Sachs (Asia) L.L.C. and BofA Securities are the joint book-running managers on the offerings.
PDD said it expects to use the funds from the offering to improve its balance sheet, which will provide it with more “flexibility” to support its “growth strategies.”
Investors Turn to PDD’s Shares
As Beijing has unveiled unveiling draft rules that aim to crack down on companies that use monopoly practices, investors have turned to PDD’s stock in the past week. A big reason has been the surge in demand PDD’s e-commerce platform has been seeing during the pandemic.
Not only did PDD post 89% year-over-year revenue growth, but it also reported its first quarterly profit for the first time since its IPO in the third quarter.
David Liu, the vice president of PDD told CNBC Monday that the pandemic has altered consumer buying habits for groceries.
“There is a change in terms of how people want to satisfy their daily grocery needs, and they want more selection,” he told CNBC’s Arjun Kharpal as part of the annual East Tech West conference.
“People are also looking for an alternative to the traditional wet markets and supermarkets that they normally have access to.”
As result, PDD is “close to doubling” its fresh produce sales on its platform compared with the totals in 2019, according to Liu.
Meanwhile, despite the big gains in the past week, PDD’s stock has pulled back in the last couple of trading days. By midday Tuesday, the stock in PDD was trading 3% lower at $137.25 per share.
Shares of PDD have surged 256% year-to-date.