Tech

China's Meituan raises $4.2 billion and prices its initial public offering near the top

Key Points
  • China’s Meituan Dianping priced its Hong Kong initial public c offering near the top end of an indicative range, raising $4.2 billion in the world’s biggest internet-focused float in four years, according to Reuters’ sources.
  • Meituan, an online food delivery-to-ticketing services platform, is backed by Chinese social media and gaming giant Tencent.
  • The company sold about 480 million primary shares, or 8 percent of its enlarged share capital, at HK$69 ($8.79) each.
Motorcycles for the take-out delivery service of Meituan.com, stop outside a Beijing residential district.
Zhang Peng | LightRocket | Getty Images

China's Meituan Dianping, an online food delivery-to-ticketing services platform, priced its Hong Kong initial public offering near the top end of an indicative range, raising $4.2 billion in the world's biggest internet-focused float in four years, people close to the transaction said on Thursday.

Meituan, backed by Chinese social media and gaming firm Tencent Holdings, sold about 480 million primary shares, or 8 percent of its enlarged share capital, at HK$69 ($8.79) each, the people told Reuters.

A source also confirmed to CNBC that the shares were priced at HK$69.

They declined to be identified as details of the pricing have not been published yet.

Beijing-based Meituan didn't immediately respond to a request for comment on the pricing.

It set a price range of HK$60 to HK$72 per share on Aug. 31.

The company could raise as much as $4.85 billion in total if a 15 percent "greenshoe", or over-allotment option, is fully exercised after the shares begin trading.

Meituan will use the IPO proceeds to fortify itself against stiff competition from its main competitor, food-delivery platform Ele.me which is backed by China's biggest e-commerce company Alibaba Group Holding. Both parties are offering heavy discounts to attract new customers.

The IPO is one of the biggest in a packed Hong Kong listing calendar for the coming months, including an expected float of at least $3 billion from bitcoin mining equipment maker Bitmain and an IPO worth up to $1 billion from Chinese movie ticketing platform Maoyan Weying.

Hong Kong has seen a pickup in interest for listings following a market rally early this year and after the exchange introduced new rules designed to attract tech companies by allowing dual-class share structures.

Meituan's IPO is also the city's second multi-billion-dollar tech float this year after Chinese smartphone maker Xiaomi Corp's IPO of $5.4 billion.

But Hong Kong's stock market has turned, with the benchmark falling 20 percent from its January peak amid Sino-U.S. trade tensions, and several recent listings, such as Xiaomi's, have dropped below their IPO prices.

— CNBC's Emily Tan contributed to this report.