Date
18 August 2018
The IPO pricing values money-losing Pinduoduo at US$23.8 billion, including all outstanding share options. Photo: Reuters
The IPO pricing values money-losing Pinduoduo at US$23.8 billion, including all outstanding share options. Photo: Reuters

Pinduoduo said to price US IPO at top end, raising US$1.63 bln

Chinese online group discounter Pinduoduo Inc. priced its US initial public offering (IPO) at US$19 per American depositary share (ADS), raising US$1.63 billion in the second-biggest US float by a Chinese firm this year, Reuters reports, citing people familiar with the situation.

The pricing values money-losing Pinduoduo, which counts Chinese internet giant Tencent Holdings as a main backer, at US$23.8 billion including all outstanding share options, compared with a valuation of US$15 billion following a funding round in April.

The fast-growing company allows consumers to group together to get better discounts from merchants selling goods as varied as clothes, kitchenware and gadgets.

It offered about 85.6 million ADS, or about 6.8 percent of its enlarged share capital, at US$16 to US$19 each.

Pinduoduo is joining several sizable Chinese listings in New York this year even as Sino-US trade tensions involving tit-for-tat tariffs rattle global markets.

Chinese video streaming service provider iQiyi Inc. raised US$2.42 billion from a Nasdaq IPO in March, and Tencent Music Entertainment, China’s largest music-streaming firm, aims to raise up to 4 billion in a US offering planned for October.

Set up by former Google engineer Colin Huang in 2015, Pinduoduo said in US regulatory filings that it had attracted over 300 million active buyers and more than a million merchants to its platform.

Due to low-priced products and a large user base in China’s smaller cities, the firm’s gross merchandise volume exceeded 100 billion yuan (US$14.98 billion) last year. Alibaba’s Taobao marketplace took five years to reach that milestone, while JD.com took 10 years.

Investors and analysts also attribute its rapid growth to the online traffic derived from Tencent’s messaging-to-shopping app WeChat, which helps direct many of its more than 1 billion users to Pinduoduo.

Pinduoduo’s revenue has grown sharply, reaching 1.38 billion yuan in January-March from 37 million yuan in the same period the year prior. Its net loss, however, remained broadly steady at 201 million yuan.

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