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Chinese online delivery group Meituan Dianping has secured $4.2 billion worth of funds from its initial public offering in Hong Kong, proving the weak market that investors continue to have a keen interest on rapidly-growing technology firms.

People with knowledge of the matter stated on Thursday that Meituan, which is backed by Chinese gaming company Tencent Holdings Ltd., sold 8 percent of its expanded share capital or around 480 million primary shares at HK$69 ($8.79) each in the world’s largest internet-focused IPO.

That places Meituan’s value at about $52.8 billion, including shares to be issued under a pre-IPO employee stock ownership plan (ESOP), according to sources.

The people also said the HK$69 IPO price represents a multiple of 27 times its 2020 profit estimate by its underwriting syndicate.

The money will help the Beijing-based firm to further strengthen itself against intense battle from its major rival, food-delivery platform Ele.me which is backed by Chinese online retail giant Alibaba Group Holding Ltd.

Meituan Prepping for Hong Kong Listing

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Meituan’s IPO is one of largest in a packed Hong Kong listing calendar for the upcoming months, including an estimated float of at least $3 billion from bitcoin mining designer Bitmain Technologies Ltd. and an IPO worth around $1 billion from online movie ticketing service provider Maoyan Weying.

Hong Kong has seen growing interest for listings after the market experienced consecutive increases early this year and after the exchange presented new policies intended to draw tech companies’ attention by consenting to dual-class share structures.  

The proceeds raised from the IPO will be mainly use to upgrade the company’s technology, create new services and products, and seek acquisitions or investments in assets that will suit its business.

Meituan Chief Executive Wang Xing stated last week that they also intend to focus on firmly establishing the group’s presence in China, instead of aiming for overseas expansion in the near future.

Meituan’s float, the world’s biggest internet-focused IPO since Alibaba’s $25 billion New York IPO four years ago, is also Hong Kong’s second multibillion- dollar tech float in 2018 after smartphone maker Xiomi Corp.’s $5.4 billion IPO.

As part of its IPO, Meituan had arranged $1.5 billion from five key investors. Shares of Meituan are due to begin trading on September 20.

Tencent, which owned a 20 percent stake in the firm, has invested $400 million, while global asset manager Oppenheimer has committed $500 million.

London-based hedge fund Lansdowne Partners and New York-based fund Darsana invested $300 million and $200 million respectively. State-backed China Structural Reform Fund has committed $100 million.

Meituan did not comment on the pricing.

The Chinese online food delivery-to-ticketing services group has set a price range of HK$60 to HK$72 a share at the end of August. Provided that a 15 percent greenshoe or over-allotment option is carried out after the shares start trading, Meituan could raise up to $4.85 billion.

Joint sponsors for the Meituan’s IPO will include US financial firms, Bank of America Merrill Lynch, Goldman Sachs Group Inc., and Morgan Stanley.

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