Biz / Tech

Meituan files for US$4b Hong Kong IPO as competition intensifies

Online lifestyle services website Meituan-Dianping filed for a US$4 billion Hong Kong IPO as competition intensifies between rivals including Didi Chuxing and Ele.me.

Online lifestyle services website Meituan Dianping filed for a US$4 billion Hong Kong IPO on Monday as competition intensifies between the Tencent-backed platform and other online-to-offline service providers such as Didi Chuxing and Ele.me.

Meituan started out as a group-buying site and, after its merger with smaller rival Dianping in a US$15 billion deal in 2015, it has grown into a platform which connects consumers and various kinds of offline merchants such as food and beverage providers, movie theaters, hotels and entertainment venues.

The company is eyeing a listing in October this year, according to Reuters, which cited anonymous sources.

The market size of on-demand food delivery from restaurants is expected to grow at an average annual pace of 31 percent in the next five years, according to a recent report by domestic Internet consultancy iResearch.

Meituan Dianping's total transaction volumes jumped 51 percent to 357 billion yuan (US$54.9 billion) last year, and it boasts 310 million consumers as well as connections with 4.4 million merchants in over 2,800 domestic cities, according to its prospectus.

The booming e-commerce sector has been boosted by the prevalence of smartphones and the popularity of online payment infrastructure. Meituan Dianping is also helping merchants with its technological capabilities such as online marketing tools, an on-demand delivery network, plus supply chain and financial solutions to attract and retain consumers.

Its revenue picked up from 12.99 billion yuan in 2016 to 33.9 billion yuan last year.

Meituan Dianping remains loss-making, with pre-tax net losses more than tripling from 5.8 billion yuan in 2016 to 19 billion last year, as it subsidizes its operations in the online ticketing, hotel booking and car hailing sectors to compete with rivals including Alibaba-backed food delivery platform Ele.me.

Its latest foray into online and offline service includes its newly launched car-hailing service in Shanghai in March this year which aims to take on lead player Didi Chuxing. It has also acquired public rental bike operator Mobike for US$2.7 billion and seeks to offer a one-stop online-to-offline service on one integrated platform.

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