Food delivery behemoth Meituan has raised $10 billion up in a stock and convertible bonds deal, underscoring solid financial backer confidence in the development possibilities of some Chinese tech firms notwithstanding a regulatory clampdown on the area.
The Tencent-upheld firm with a market valuation of $220 billion said it intends to utilize its new war chest to put resources into self-driving delivery vehicles, delivery drones and other front line innovation.
“Meituan will utilize the vast majority of the capital in refreshing its delivery systems which right now depends on human drivers and will before long be excessively expensive for the company as work costs keep on ascending in China, said Zhang Yi, head of consultancy iiMedia Research.
“It is making arrangements for its future in 5 to 10 years time,” he added.
Experts likewise anticipate that the company should support its community group bulk purchasing service, Meituan Select, which has been growing in popularity. The support is important for its new initiatives division which has been announcing operating losses and is relied upon to keep on doing as such in the near future.
In a record raising money for the company, Meituan sold $6.6 billion in shares and acquired generally $3 billion of every two-tranche convertible securities. Another $400 million was raised by offering more offers to Tencent Holdings Ltd its biggest investor whose stake presently remains at around 17%.
At any rate 300 financial backers put requests to purchase the stock with the main 20 orders taking up around 66% of the offer, said a source with information on the matter.
Most interest came from worldwide long-just assets, mutual funds and Chinese financial backers, said the source, which declined to be named as the arrangement details were not public.
Meituan declined to remark.
The vigorous interest comes as Chinese regulators take action against innovation monsters for a scope of infringement from monopolistic conduct to spurning rules for taking care of customer information.
These incorporate a record $2.8 billion fine this month on Alibaba Group Holding Ltd for antimonopoly infringement, while Meituan Select was among five platforms fined by China a month ago for ill-advised pricing behavior.
“Chinese regulators … simply expect to direct them according to the law,” said Zhang. “Financing access, for the two monsters and new businesses, hasn’t changed and will continue to be accessible.”
Tencent a week ago brought $4.2 billion up in a bond offering that was the company’s second in a year. .
Meituan, which rivals Alibaba-upheld Ele.me among others, had an expected 68.2% of the Chinese food delivery market in the second quarter of 2020, as indicated by Trustdata.
Food delivery in China, which gets the greater part of Meituan’s complete deals, has developed in excess of multiple times since 2016 to be worth more than 650 billion yuan ($100 billion), as indicated by iResearch. Meituan’s administrations likewise incorporate restaurant review sites and bicycle sharing.
The company sold 187 million offers at HK$273.80 each, close to the top end of the demonstrative reach set on Monday. At $7 billion in value deals, the arrangement is the 6th biggest follow-on share deal by a Hong Kong-recorded company, as indicated by Dealogic information.
The convertible security offers a zero coupon rate, which means financial backers purchase to get future equity gains when it changes over into stock. They would have their principal repaid at maturity if the choice to convert over into shares isn’t exercised.
