Meituan Seeks $10 Billion To Compete In Chinese Grocery Wars

The Chinese delivery leader Meituan is aiming to raise roughly $10 billion to compete with companies like Alibaba. According to Bloomberg, Meituan is looking to raise this revenue by selling stock and convertible bonds, the largest-ever sale of new shares by a company listed on the Hong Kong exchange. The sale would involve 187 million shares of stock and $3 billion in zero-coupon convertible bonds, with Meituan also raising $400 million from its shareholder Tencent Holdings.

“The stock and bond sales come as Meituan grapples with the cost of competing against the likes of Alibaba and Pinduoduo Inc. in newer spheres, such as community eCommerce and online groceries,” Bloomberg wrote on Monday (April 19), noting that “the company has warned it will remain in the red for several more quarters despite record revenues as it spends heavily on new initiatives.”

Meituan will reportedly use the revenue it generates from the sale to fund technological innovations, such as research and development on autonomous delivery vehicles and drones. The company began using self-driving grocery delivery vehicles in Beijing after the COVID-19 outbreak began and is now experimenting with food delivery drones in Shenzhen.

“Community buying is one of Meituan’s chief expansion areas, where buyers in the same neighborhood enjoy bulk discounts on fresh produce. But the firm faces entrenched competition from other internet giants,” Fioretta wrote.

The news comes one week after Meituan and other tech giants in China were warned by the Chinese government to make a greater effort to adhere to antitrust regulations. As PYMNTS reported on April 13, the companies have one month to implement anti-competitive practices and make a public statement pledging to stick to antitrust regulations. Companies that don’t comply can face fines and backlash from regulators. Alibaba learned this the hard way this month, getting slammed with fines totaling nearly $3 billion.