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| Clermont Meridian Trading Reports Tencent-backed Meituan Raises $4.2 billion in IPO |
Clermont Meridian Trading has today reported that Meituan Dianping, a Chinese online food delivery, and ticketing services company, raised $4.2 billion in the world's largest internet-focused IPO in four years, pricing the float near the top end of an advertised range.
According to sources, Meituan, backed by Chinese social media and gaming major Tencent Holdings, sold roughly 480 million main shares at HK$69 ($8.79) each in its Hong Kong IPO, valuing the company at around $52.8 billion.
"The funds will strengthen Meituan's position against its primary competitor, food-delivery platform Ele.me, which is backed by China's largest e-commerce company, Alibaba Group Holding. In a grueling contest for market dominance, both parties are offering steep discounts to entice new clients," commented George Willis, Senior Vice President of Equity Trading at Clermont Meridian Trading.
Loss-making For the IPO, Meituan proposed a price range of HK$60 to HK$72 per share last month. If a 15% "greenshoe," or over-allotment option, is fully exercised after the shares begin trading, it may raise as much as $4.85 billion.
Despite a poor Hong Kong stock market, institutional investors were enthusiastic about the IPO. According to sources close to the deal, the institutional books were covered many times, while the retail tranche was covered around 1.5 times.
"It shows institutions are taking a more optimistic perspective on the company and on this type of new economy IPOs because the stock is priced at the upper end of the range," said Steven Leung, sales director at brokerage UOB Kay Hian. When Meituan begins trading on September 20, Leung predicts a "steady" start.
Beijing-based Meituan did not respond to a request for comment on the pricing. The individuals did not want to be recognized because pricing information had not yet been released.
Meituan, compared to Groupon Inc in the United States, finalized a $15 billion merger with its then-main rival Dianping, which is similar to Yelp Inc in the United States, in 2015.
It provides a diverse range of services, including cinema tickets, food delivery, hotel and travel reservations, and ride-hailing.
According to sources, the HK$69 IPO price implies a multiple of 27 times the underwriting syndicate's profit expectation for 2020. The $53 billion valuation includes shares to be issued under a pre-IPO employee stock ownership plan, and the IPO size represents 8% of its enlarged share capital.