Chinese e-commerce platform Pinduoduo is planning to raise up to $6.1 billion through a convertible notes offering and equity.
Why it matters: Pinduoduo is looking to fundraise amid buoyed investor confidence on the company’s first-ever quarterly profit, reported in the quarter ended September. The fast-growing e-commerce platform plans to fund new business channels and cover rising expenses.
- Robust third quarter results sent Pinduoduo shares up more than 20% on Nov. 12.
Details: The company is offering $1.75 billion in convertible senior notes due in 2025, as well as 28.7 million American Depositary Shares (ADS) at $125 apiece. There is a greenshoe option of $250 million in notes and 4.3 million ADS, bringing the total offering potentially as high as $6.1 billion. Pinduoduo said the offer was oversubscribed.
- The proceeds will be used to “strengthen its balance sheet and make strategic investments in infrastructure, expanding business operations, making future acquisitions, and entering partnerships,” the company said in a statement on Wednesday.
- During the earnings call held last week, Pinduoduo management highlighted two points of focus for the company: its “New Brand” initiative where the platform provides support to merchants and manufacturers under the “consumer-to-manufacturer” business model, and the produce and grocery pick-up service, which began taking off after the pandemic lockdown.
- “We are seeing large-scale changes in consumer habits as a result of Covid-19, which are accelerating digital transformation across different sectors,” Chen Lei, chief executive officer of Pinduoduo, said in the statement. “We are prepared to invest capital and resources to improve our platform and build infrastructure to capture key opportunities.”
Context: Pinduoduo had already received nearly $1.8 billion before going public, and continues to actively fundraise even after its $1.6 billion Nasdaq debut in 2018.
- Pinduoduo offered $1 billion convertible notes in September 2019 to fund its expansion into higher-tier domestic markets.
- Undisclosed long-term investors invested $1.1 billion in the e-commerce company through a private placement in March.
Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at firstname.lastname@example.org.
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