Three-year-old Chinese ecommerce website files for $1b IPO in US

Pinduoduo, a Chinese ecommerce website backed by technology giant Tencent, is the one of the major online sales platforms in the country along with Alibaba and JD.com.
Written by Cyrus Lee, Contributor

Pinduoduo, the third-largest ecommerce website after Alibaba and JD.com in China, has filed for an initial public offering in the US to seek as much as $1 billion on Friday, in a move that surprised the market as the company was established less than three years ago.

Founded in September 2015 by a former Google software engineer Colin Huang, the Shanghai-based company is known for its Groupon-like business model, which encourages consumers to shop for similar daily necessities with friends and other netizens in order to receive big discounts on prices, as mechanizers are able to offer cheaper prices due to the large quantities.

Underwriters of Pinduoduo's US listing include UBS, Goldman Sachs, and CICC, but the company is yet to determine the stock exchange that will host its initial public offering, according to a Sina news report on July 1.

Revenue of Pinduoduo mainly comes from online advertisements and trade commissions. Since its inception, revenue has grown at a high rate, as have losses, according to the report.

Pinduoduo's gross merchandise volume (GMV) reached 141.2 billion yuan and 66.2 billion in 2017 and the first quarter of 2018, respectively, during which its total orders were also registered at 4.3 billion and 1.8 billion.

Revenue reached 1.7 billion yuan in 2017 compared with 505 million yuan a year earlier, while the company also reported 292 million yuan and 525 million yuan in net losses in 2016 and 2017, respectively. Revenue and net loss in the first quarter of 2018 were 1.4 billion yuan and 201 million yuan, according to the filling document.

For the 12 months ended March 31, active buyers on Pinduoduo reached 295 million, while monthly active users were 103 million. Active merchandisers also exceeded 1 million during the same period, according to the company.

Pinduoduo completed the last C-round of fundraising in April when the company raised about $3 billion, led by Tencent and followed by Sequoia Capital China, pushing the company's valuation to about $15 billion.

Founder Huang, who owns 50.7 percent of stake in Pinduoduo, said the company filed an IPO application in the US less than three years after its establishment as "its business type has a strong social nature, therefore it should eventually go to the public and share its growth with the public".

"We believe that there is great potential in Pinduoduo," Huang said in a letter to the shareholders, according to the Chinese report. "There is no real difference between listing now and listing in three years, five years, or even longer time. On the contrary, under the supervision of the public, we can grow better and stronger."


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