Tencent-backed Meituan Dianping raises $4.2b via HK IPO

The Meituan logo is seen in this illustration photo October 19, 2017. REUTERS/Thomas White/Illustration

China’s Meituan Dianping, an online food delivery-to-ticketing services platform, priced its Hong Kong initial public offering (IPO) near the top end of an indicative range, raising $4.2 billion in the world’s biggest internet-focused float in four years, people close to the transaction said on Thursday.

Meituan, backed by Chinese social media and gaming firm Tencent Holdings, sold about 480 million primary shares, or 8 percent of its enlarged share capital, at HK$69 ($8.79) each, the people told Reuters.

They declined to be identified as details of the pricing have not been published yet.

Beijing-based Meituan didn’t immediately respond to a request for comment on the pricing.

It set a price range of HK$60 to HK$72 per share on Aug. 31. The company could raise as much as $4.85 billion in total if a 15 percent “greenshoe”, or over-allotment option, is fully exercised after the shares begin trading.

Meituan will use the IPO proceeds to fortify itself against stiff competition from its main competitor, food-delivery platform Ele.me which is backed by China’s biggest e-commerce company Alibaba Group Holding. Both parties are offering heavy discounts to attract new customers.

The IPO is one of the biggest in a packed Hong Kong listing calendar for the coming months, including an expected float of at least $3 billion from bitcoin mining equipment maker Bitmain and an IPO worth up to $1 billion from Chinese movie ticketing platform Maoyan Weying.

Hong Kong has seen a pickup in interest for listings following a market rally early this year and after the exchange introduced new rules designed to attract tech companies by allowing dual-class share structures.

Meituan‘s IPO is also the city’s second multibillion-dollar tech float this year after Chinese smartphone maker Xiaomi Corp’s IPO of $5.4 billion.

But Hog Kong’s stock market has turned, with the benchmark Hang Seng index falling 20 percent from its January peak amid Sino-U.S. trade tensions, and several recent listings, such as Xiaomi’s, have dropped below their IPO prices.

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