Alibaba-Backed Buying Site Meituan Considering U.S. IPOBloomberg News
Meituan.com, a Chinese group discount website backed by Alibaba Group Holding Ltd., is considering a U.S. initial public offering as it forecasts sales to triple this year.
The company that offers discounts similar to Groupon Inc. expects transactions to more than double to 40 billion yuan ($6.42 billion) this year from 16 billion yuan last year, Chief Executive Officer Wang Xing said during a May 7 interview in Beijing. Revenue is forecast to triple to about $300 million (1.9 billion yuan), he said.
“In the future, yes,” Wang said when talking about plans for an IPO. “If you ask me now, I would prefer the U.S.”
Meituan, which has 90 million active mobile users and is at least 10 percent owned by Alibaba Group, is tapping into China’s surging middle class, which is seeking deals for entertainment and restaurants. About 70 percent of the platform’s transactions are done through Meituan’s mobile applications as the company competes against Dianping.com, the Yelp-like website backed by Alibaba competitor Tencent Holdings Ltd., which is Asia’s largest Internet company.
Wang said during the May 7 interview that Meituan isn’t under short-term funding pressure and doesn’t want to be acquired.
“We prefer to grow independently because we believe the market is big enough,” he said.
Yelp has a market value of about $3.9 billion and Groupon $4.13 billion, according to data compiled by Bloomberg.
Meituan, which began offering its services in March 2010, attracted $12 million from Sequoia Capital Operations LLC the same year and another $50 million of investment led by Alibaba and Sequoia in July 2011. The company broke even last year, Wang said.
E-commerce spending by Chinese consumers will reach 3.3 trillion yuan by 2015, according to a Bain & Co. report in August. China has more than 618 million Web users.
Alibaba, China’s biggest e-commerce company, filed May 6 for what may be the biggest IPO ever in the U.S. The Hangzhou-based company owns between 10 and 15 percent of Meituan, Wang said.
Florence Shih, a spokeswoman for Alibaba, declined to comment on the company’s stake in Meituan.
Beijing-based Meituan offers local business-search services that include consumer-generated reviews. Users also can buy coupons and get group discounts.
Meituan has partnerships with about 400,000 merchants in China and is looking to expand its offerings by 50 percent to 300 cities this year, Wang said.
With about 3 billion yuan of cash on hand, Meituan may acquire smaller, local websites that provide information and discounts for services including in karaoke, hotels and salons, Wang said.
The company has about 5,000 employees, with about 3,000 focusing on attracting merchants to offer services on the platform. Its staff could grow to 8,000 by year’s end, Wang said.
Tencent acquired about a 20 percent stake in Dianping to tap the 100 million monthly active users who access the website’s reviews and discounts for food and entertainment.
Baidu Inc., China’s largest search engine, bought a majority stake in the group buying site Nuomi Holdings Inc. for about $160 million in August. Baidu agreed to buy the remaining shares in January, without disclosing a price.
— With assistance by Lulu Chen