Meituan Seeking to Raise $10 Billion to Invest in Drones and Autonomous Cars

By Mariliana Fotopoulou Tuesday, April 20, 2021

Chinese platform Meituan, a one-stop platform for food, transportation, travel, shopping, and entertainment, is looking to raise almost $10 billion from the sale of new stock and convertible bonds in a bid to become a more serious competitor to its ecommerce rivals.

A Meituan delivery courier on a motorbike.

Massive Funding Secured

Meituan is looking to use the new capital to heavily invest in technology, hoping to gain an edge over its competitors by delivering goods using drones and autonomous cars powered by artificial intelligence (AI). The company is one of the top tech companies in China in terms of business valuation.

Meituan operates a technology platform that allows users to buy a number of services, including ordering meals and groceries, book hotels, flights, transport services, and more. The company said it will raise $7 billion in funding through stock issuance, in addition to $2.97 billion to be raised through the sale of convertible bonds.

The figure is more than double than what the company raised back in its IPO in 2018, when it secured $4.2 billion, indicating strong interest among business investors in Chinese tech companies.

The company said it will use a part of the fresh capital to invest in research and the development of AI cars, drone deliveries, and more. This news comes just a day after the tech business introduced a new series of delivery cars powered by AI technology.

Meituan claims that the new generation of delivery cars, powered by AI, is smarter and safer than its predecessors and has longer battery life and increased load capacity. The Beijing-based business said it has been developing this new AI technology for the past five years and made its first deliveries in the capital city of China. Meituan hopes to launch this business service in other Chinese cities over the next three years.

Tencent, one of the major shareholders in Meituan, said it will purchase $400 million in shares of the company if allowed by independent shareholders. If it happens, Tencent and its partners will hold a 17.2% stake in Meituan.

Meituan also plans to issue two sets of zero-coupon convertible bonds of $2.98 billion in combined value, due in 2027 and 2028. The offer price was set at HK$273.80 per share ($35.27 per share), which represents a 5.3% discount compared to the closing price of the stock on Monday.

Earlier, the company reported an operating loss of ¥2.9 billion ($445 million) for its Q4 — more than double the ¥1.4 billion ($215.48 million) operating profit reported a year ago. During the quarter, Meituan’s business revenues surged almost 35% to ¥37.9 billion ($5.83 billion) year-on-year.

Meituan stock touched new highs in February. However, the stock has lost as much as 36% since then as a result of a massive selloff in Chinese tech stocks due to fears over tougher regulations in the country.

Summary

Chinese delivery giant Meituan is planning to raise as much as $10 billion through the sale of new stock and convertible bonds to compete with other Chinese ecommerce rivals. The company said it will use a portion of the proceeds to invest in technology, including delivery drones and delivery cars fueled by the latest AI technology.

About the Author


Headshot for author Mariliana Fotopoulou

Mariliana has an MSC in consumer analytics and business strategy. She has a special interest in fast-moving industries and big data.

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