Meituan-Dianping Updates Operating Data in IPO Prospectus, Raising Valuation to $55 Billion

Meituan-Dianping (Meituan), one of the most popular local online group purchase platforms in China, updated the operating data throughout its IPO Prospectus on September 3. The company could now be worth close to $55 billion, much higher than its previous valuation.

The Beijing-based company is now planning to deliver a Hong Kong IPO this week at a price range of 60 to 72 Hong Kong dollars (about $7.64 to $9.17), and could potentially raise as much as $4.5 billion if priced at the top end, according to the prospectus.

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The company is also looking to secure $1.5 billion from its five cornerstone investors, including tech giant Tencent Holdings as its main backer, global asset manager Oppenheimer, UK hedge fund Lansdowne Partners, U.S. hedge fund Darsana Master Fund LP, and Chinese conglomerate China Chengtong Holdings Group.

According to the updated IPO, Meituan posted a revenue of $2.3 billion (RMB15.8 billion) in the first four months of 2018, doubling that of 2017 for the same period.

The revenue comes from three major segments: food-delivery service, hotel bookings, and other new services. The three now represent 61.2 percent, 27.5 percent and 11.3 percent of the company’s total income respectively. Food-delivery services, the core business of Meituan, posted a revenue of $1.42 billion, a 107.78 percent rise over the same period last year.

Despite the gains in revenue, Meituan has yet to turn a profit. The company is reporting a net loss of $290 million in the first four months of 2018. The net loss has shrunk from a total of $3.3 billion in 2017. Meituan attributed the loss to the launch of new services and the investing expense when it acquired Mobike, a Chinese bike-sharing service provider, this April.

The costly acquisition and the losses suffered by the company have led to criticism and doubts among investors, as they are afraid that the deficits may become permanant, making the business unreliable for future investments.

Meituan was last valued at around $30 billion in a fundraising round last year.

Bank of America Merrill Lynch, Goldman Sachs Group, and Morgan Stanley are joint underwriters of Meituan‘s IPO. China Renaissance is the financial adviser.