Beijing based online local service platform Meituan (HKG: 3690) raised a total of $10 billion in a stock and convertible bonds sale. This financing initiative sends a strong message that investors indeed have strong faith in the growth rate of the company.
Following this financing, Meituan now has a market valuation of $220 billion. The company says it will be using the proceeds to invest in delivery drones, autonomous vehicles and other upcoming technological developments.
The company is planning for its future outlook, it says it will use its capital to update its delivery system which currently relies on human drivers which might be unbearable in the coming future because human capital costs in China is increasing with each passing day.
In the fundraising Meituan sold $6.6 billion in shares and gained slightly $3 billion in two-tranche convertible bonds. In addition, it raised another $400 million from selling more shares to Chinese tech company Tencent Holdings (HKG: 0700).
This sale makes Tencent the largest shareholder in Meituan with a share ownership of 17%. Involved sources revealed that 300 investors placed orders to buy the shares and bonds.