Shanghai's Pinduoduo e-commerce platform seeks US$1.9 bln in IPO

Shanghai-headquartered social-media based discount platform Pinduoduo is seeking to raise as much as US$1.87 billion in an initial public offering on the NASDAQ as it joins a number of Chinese Internet companies seeking offshore listing as competition with domestic rivals heats up.

Pinduoduo plans to sell about 85.6 million American Depositary Shares at between US$16 and US$19 each, according to an updated prospectus filed with the US Securities and Exchange Commission today.

About 40 percent of the funds will be used to enhance and expand business, 40 percent for research and development and the remainder for general corporate purposes.

Two of the firm’s biggest shareholders, Tencent Holdings Ltd and Sequoia Capital, have shown interest in buying US$250 million of shares in the IPO, according to the filing. Other major shareholders include Gaorong Capital and Banyan Partners Funds.

Last month Pinduoduo said in its prospectus that it had 103 million monthly active users of its mobile platform at the end of March.

Thanks to a large user base, largely accumulated through Tencent's WeChat, the three-year-old Pinduoduo has been quickly catching up with top e-commerce firms including Alibaba's Taobao and JD.com.

The Pinduduo app allows users to participate in group buying with discounts of up to 90 percent by spreading the deal among friends and contacts through social networking.

Following the listing, founder and chairman Colin Huang, a former Google engineer, will hold a 46.8 percent stake and 89.9 percent of the voting rights. Tencent will own 17 percent.

Pinduoduo targets low-income customers in lower-tier cities and towns. It says it connects with 48,000 vendors in 730 poorer counties and that it will continue to connect consumers with rural fresh food vendors and help them become more efficient in production and logistics.

Revenue, which comes from merchant advertising and commissions, increased 37-fold in the first quarter this year from a year earlier to 1.38 billion yuan (US$219 million).