Tencent-backed PDD eyes US$1.6bil in mega tech IPO
BEIJING: Pinduoduo Inc (PDD), the Chinese e-commerce operator backed by Tencent Holdings Ltd, plans to raise as much as US$1.6bil in a US initial public offering to bankroll a fight against rivals like Alibaba.
The Shanghai-based firm is offering 85.6 million American Depositary Shares at US$16 to US$19 apiece, it said in a stock exchange filing.
Tencent, the leader in Chinese social media and gaming, and existing shareholder Sequoia Capital both expressed interest in buying US$250mil worth of stock, the company added.
Known as PDD, Pinduoduo became one of China’s fastest-growing startups by creating a sort of Facebook-Groupon mashup that challenged the e-commerce duopoly of Alibaba Group Holding Ltd and JD.com Inc.
It popularised a format where people spot deals on products from fruit and clothing to toilet paper, then recruit friends to buy at a discount.
It can offer savings of up to 20% on market prices by letting consumers buy directly from manufactur- ers, cutting out middlemen and advertising.
Founded by ex-Google engineer Colin Huang, the three-year-old startup is said to have targeted a valuation of as much as US$30bil, putting it on par with the likes of on-demand services giant Meituan Dianping.
Based on its filing, PDD would be valued at about US$21bil after the IPO. Huang, who launched his career in Silicon Valley before returning home to become an entrepreneur, would control the majority of the company’s voting rights.
PDD, which has yet to turn a profit as it ramps up marketing across the country, is one of the biggest among a number of ambitious but loss-making tech companies turning to public markets this year for much-needed cash.
“PDD’s strength is really the steep price discount but if you don’t have that – and you have to phase that out to generate profits – then what happens to the customers?” Kim Eng Securities analyst Mitchell Kim said. “They’re trying to take advantage of the high global tech valuations,” he added. —