(Yicai Global) July 26 -- Tencent-backed Pinduoduo, China’s leading online group discounter, has priced its initial public offering at the top of its range ahead of today’s Nasdaq listing.
Mengxun Information Technology, the company behind the bulk-buy platform, priced the shares at USD19 each for a valuation of almost USD24 billion, Tencent's news website QQ reported. That’s over 30 times the Shanghai-based startup’s expected net profit for next year.
Mengxun Information said earlier that it wanted to raise as much as USD1.87 billion in the IPO, with a price range of USD16 to USD19 a share. Media reports claim the unprofitable company raised USD1.6 billion, making it the second-biggest public offering by a Chinese firm in the US so far this year.
Former Google engineer Colin Huang set up Pinduoduo in 2015 to enable users of Tencent’s WeChat, China’s biggest social network, to buy products together with friends at wholesale prices directly from producers. The startup has replaced JD.Com as the country’s second-largest e-commerce platform by market penetration.
Pinduoduo will issue 85.6 million American depositary shares, the firm's updated prospectus from July 17 shows. Market analysts said that the stocks are already about 20 times oversubscribed in the pre-IPO placement, with some of the investors including US asset manager Fidelity Funds and Abu Dhabi's sovereign wealth fund.
Proceeds from the share sale will be used for expansion, including strategic investments and acquisitions, research and development and to replenish working capital. The underwriters are Goldman Sachs, Credit Suisse, China International Capital Corporation, and China Renaissance Group.
Huang has a 46.8 percent stake that under the company’s dual-class share structure gives him 89.8 percent of the voting rights. A listing priced at USD19 a share would net him US11.2 billion.
Pinduoduo had some 295 million annual active users during the 12 months ended March 31, up from 245 million at the end of last year. The platform's annual commission and advertising revenue reached CNY1.3 billion (USD192 billion) in the first three months of this year, a 38-fold increase over the same period last year.
Editor: Emmi Laine