Bottom line: A new IPO by e-commerce company Pingduoduo could do reasonably well due to its rapid growth and unusual business model, but could suffer from a “flavor of the day” element over the longer term.
Pinduoduo puts new spin on group buying
After years of basically having just two choices to invest in China’s e-commerce market, investors will soon have another new and interesting option with the upcoming listing of a company called Pinduoduo. I’ll admit that I was unfamiliar with Pinduoduo before reading about this upcoming listing. But that said, the numbers do point to a potential high-flyer in the making, including a business model that combines elements of Groupon (Nasdaq: GRPN) and Facebook (Nasdaq: FB) to let people recruit their friends to get good deals on merchandise.
The company is also noteworthy for its ties to social networking giant Tencent(HKEx: 700), whose wildly popular WeChat platform is apparently the main venue where friends can get together to get their deals. This particular deal comes as China’s own homegrown Groupon, Meituan-Dianping, prepares for its own Hong Kong listing in a deal expected to raise up to $6 billion, amid a broader bumper IPO season for China new economy offerings. Read Full Post…
Bottom line: Rumors that Baidu may be planning to merge its take-out dining and group buying units with Meituan-Dianping are consistent with recent market trends, but are less likely to be true due to Baidu’s strong denial.
Baidu denies merger plan for group buying, dining units
I normally try to avoid writing about rumors that lack strong foundation, but the latest gossip about a potential new mega tie-up between 2 non-core units of online search leader Baidu(Nasdaq: BIDU) and group buying giant Meituan-Dianping look too spicy to ignore. Baidu came out with a statement late on Tuesday denying any talks were taking place to combine its take-out dining and Nuomi group buying services with Meituan-Dianping. But that said, any veteran China watcher will know that companies frequently deny such rumors even when they’re true. Read Full Post…
Bottom line: Groupon’s new tie-up with Comcast shows it’s more interested in working with a well-known US-based company than the unfamiliar Alibaba, which could force Alibaba to quietly dump its Groupon stake by the end of this year.
Comcast buys into Groupon
It seems e-commerce giant Alibaba (NYSE: BABA) isn’t the only company interested in money-losing group buying site Groupon (Nasdaq: GRPN). Less than 2 months after Alibaba disclosed it had purchased 5 percent of Groupon shares, apparently in the open market, a firm backed by US cable giant Comcast (Nasdaq: CMCSA) has just announced plans for its own strategic tie-up with the faded group buying site.
This new move certainly seems to throw some doubt on my previous prediction that Alibaba’s purchase could presage a boosting of its stake in Groupon, or perhaps even an outright buyout bid. While such a move is still possible, Groupon does seem to be signaling that it intends to remain independent. It also seems to be indicating it prefers this more direct approach to forming new partnerships, rather than Alibaba’s approach that looks a bit stealthier since it appeared to buy its Groupon shares without the company’s consent. Read Full Post…
Update: An official at an investment firm involved in the deal confirmed to YCBB that the merger talks are happening.
Bottom line: The merger of Dinaping an Meituan will make uneasy in-laws of Tencent and Alibaba, and will likely be followed within a year by a buyout by one of the partners or IPO for the new company.
Meituan, Dianping in uneasy union
The headlines are buzzing today with word of an imminent merger between leading group buying sites Dianping and Meituan on this first day back to work after the week-long National Day holiday. The deal is certainly a landmark one, as it will create a clear leader in the emerging category of online-to-offline (O2O) companies that bring together the convenience of Internet buying with offline products and services like restaurant dining, going to the movies and hailing a taxi.
Some media are pointing out the merger will pose a major new challenge to the aggressive O2O aspirations of Baidu (Nasdaq: BIDU), which is pouring hundreds of millions of dollars into building out its own rival services. But for me, this particular marriage represents the latest chapter of an increasingly close but also uncomfortable alliance between the country’s other 2 Internet giants, Tencent (HKEx: 700) and Alibaba (NYSE: BABA), which are major stakeholders in Dianping and Meituan, respectively. Read Full Post…
Bottom line: Meituan is feeling increasing isolation as its 2 chief rivals strengthen partnerships with Baidu and Tencent, and is likely to be forced into a similar tie-up by the end of next year to maintain its industry-leading position.
Meituan feels growing isolation
Leading group buying site Meituan is finally responding to a flurry of reports involving its own finances and a new challenge coming from top search engine Baidu (Nasdaq: BIDU), releasing data that reflect its own strong growth and market dominance. At the same time, CEO Wang Xing is also shooting down rumors that his company is in the process raising $1 billion in new funds, and is repeating his previous position that his company isn’t in any hurry to make an IPO.
The sudden release of information by this low-profile company raises the bigger question of what’s the motivation behind this flurry of activity for the normally low-profile Meituan. I personally believe the company isn’t gearing up for an IPO, especially in the wake of all the market turbulence in China right now and the flood of US-listed Chinese companies that have announced plans to privatize and return home to re-list. Read Full Post…
Bottom line: Dianping’s bigger-than-expected fund-raising underscores its popularity among investors, and could pressure it to make an IPO worth $1 billion or more this year to capitalize on positive market sentiment.
Dianping closes $850 mln funding
China’s online group buying space could be closer to getting its first IPO, with word that Dianping, one of the industry’s 2 leaders, has just raised a whopping $850 million in its fifth funding round. The massive funding has actually been in the works since late last year, but kept growing as more investors clamored for a piece of this hot company. The move sends the latest signal that Dianping may be eying an IPO later this year that could raise up to $1 billion or more.
Word of the funding comes as a more advanced IPO plan has gone missing from smaller rival 55Tuan, which was hoping to become China’s first publicly listed group buying site. 55Tuan made a public filing for a New York IPO back in January, and a later filing indicated it planned to sell its shares and begin trading on February 25. But that date has come and gone with no listing, and there’s still no word on the reason for the delays more than 2 weeks later. Read Full Post…
Bottom line: 55Tuan’s listing plan stands a 50 percent chance of succeeding due to its modest size and broadly positive market sentiment, but could ultimately fail due to its loss-making status.
55Tuan files for Nasdaq IPO
I spent much of December predicting we’d see the first listing of a Chinese group buying site this year, and now that may happen with the first official IPO filing by a Chinese Internet company in 2015. But my prediction that the listing would come from sector leaders Dianping or Meituan was off the mark, and now it appears that 55Tuan may take the prize as China’s first listed group buying site. It’s still not completely certain that 55Tuan will be the first, since the company made previous attempts at such an offering but ultimately had to scrap the deal due to lack of interest. Read Full Post…
Bottom line: Dianping’s major new fund raising is likely to be its last before a New York IPO, which could come as soon as the first half of next year and raise up to $800 million.
Dianping in major new fund raising
I’m having a slight feeling of deja vu today, after reading the latest reports that restaurant ratings and group buying site Dianping has just won a major new funding round worth nearly $800 million. This particular news comes just a week after similar reports came out saying that rival group buying site Meituan was on the cusp of closing a new funding round totaling $700 million, in one of the biggest such private investments for China’s Internet sector this year. Internet watchers will recall that the last time we saw this kind of fund-raising flurry around a single industry came nearly 4 years ago, when investors poured hundreds of millions of dollars into the very same group buying space. Read Full Post…
Bottom line: Dianping or Meituan is likely to mount an IPO bid next year, in a deal that could value either at around $5-10 billion and win a premium as China’s first group buying site to list.
Meituan gets new mega-funding
China’s newly consolidated group buying sector could be close to making its first IPO, with word that leading operator Meituan is on the cusp of landing a massive $700 million in new funding. Such a huge amount would be the company’s fourth round of funding since 2010, and would follow not long after it reportedly raised $300 million earlier this year. That kind of funding frenzy often comes just before an IPO, which leads me to expect we could finally see Meituan become China’s first publicly listed group buying Internet company with a New York IPO perhaps in the first half of next year. Read Full Post…
Online travel is quickly taking on a new cult-like status among investors, with word of a major new funding for vacation rental site Tujia. This latest fund-raising frenzy in online travel looks very similar to what happened in group buying about 4 years ago, when investors pumped billions of dollars into a wide range of money-losing start-ups. Internet watchers will know that many of those companies later went bust, raising the prospect that a similar fate could be waiting for the online travel sector. Read Full Post…
Xunlei and 55tuan have emerged as 2 of the biggest orphans in the rapidly consolidating online video and group buying spaces, respectively, putting pressure on both to find partners to boost their chances for long-term survival. The pair were in separate headlines this week in their search for new tie-ups, with Xunlei selling a major stake of itself to software maker Kingsoft (HKEx: 3888) and 55tuan reportedly in talks to sell some or all of itself to security software maker Qihoo 360 (NYSE: QIHU). Read Full Post…
