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HONG KONG/SHANGHAI (Reuters) – China’s Meituan-Dianping, an online food delivery-to-ticketing services platform, is bringing its sizable initial public offering (IPO) to Hong Kong, where it aims to raise over $ 4 billion, three people with knowledge of the deal said.
The firm filed plans late on Friday for the city’s second multibillion-dollar tech float this year after smartphone maker Xiaomi Corp’s blockbuster IPO of up to $ 6.1 billion. Meituan-Dianping is also – after Xiaomi – the latest company with a dual-class share structure to file for a Hong Kong listing, under the city’s new rules designed to attract tech companies.
The Beijing-based firm, backed by gaming and social media company Tencent Holdings Ltd (0700.HK), was valued at around $ 30 billion in a fundraising round last year.
It is aiming for a $ 60 billion valuation with the IPO, though industry insiders said it may have difficulty reaching that target as it is still money-losing and relies on a cash-burning business model to boost growth.
The firm is likely to list in October, said the people, who declined to be identified as the information was not public.
Meituan-Dianping did not detail the amount of funds targeted or a time frame. It declined to comment on its planned IPO when contacted by Reuters.
Founded in 2010 by serial entrepreneur Wang Xing, Meituan, likened to U.S. discounting platform Groupon Inc (GRPN.O), in 2015 completed a $ 15 billion merger with Dianping, akin to U.S. online review firm Yelp Inc (YELP.N). It offers a broad range of services including movie ticketing, food delivery, hotel and travel booking as well as ride-hailing.
Competitors include food-delivery platform Ele.me, backed by e-commerce firm Alibaba Group Holding Ltd (BABA.N), and leading ride-hailing firm Didi Chuxing, backed by Japan’s SoftBank Group Corp (9984.T).
In its draft prospectus, which gave investors the first detailed look at its financial health ahead of the IPO, the company disclosed a 19 billion yuan ($ 2.9 billion) loss for 2017, steeper than in the previous two years.
Its adjusted net loss – which excludes the impact of fair value changes of convertible redeemable preferred shares and other items – was 2.85 billion yuan, smaller than losses of 5.35 billion yuan in 2016 and 5.91 billion yuan in 2015, the prospectus showed.
Revenue rose to 33.9 billion yuan in fiscal 2017, sharply higher than the 12.99 billion yuan made in the prior year.
Meituan-Dianping’s other backers include venture capital firms Sequoia Capital and DST Global, Singapore sovereign wealth fund GIC Pte Ltd and state-owned investment company Temasek Holdings (Private) Ltd, as well as the Canada Pension Plan Investment Board.
Currently, Chief Executive Wang Xing owns 11.4 percent of the company, while Tencent owns 20.1 percent and Sequoia Capital 11.4 percent. Wang will remain controlling shareholder after the listing, the prospectus showed.
Being holders of Class A shares, Wang and two other co-founders, Mu Rongjun and Wang Huiwen, will be beneficiaries of a weighted voting rights structure, or dual-class shares, which give greater power to founding shareholders even with minority shareholding. Each Class A share has 10 votes while each Class B share has one vote.
Reporting by Adam Jourdan in Shanghai, Julie Zhu and Fiona Lau of IFR in Hong Kong, Aaron Saldanha in Bangalore, and Matthew Miller in BeijingEditing by Christopher Cushing and Edwina Gibbs
Here we go. J.P. Morgan Chase has applied for a patent to facilitate payments between banks using the blockchain.
The patent was originally submitted in October, but the application was made public by the U.S. Patent and Trademark Office on Thursday. It outlines a system that would essentially use distributed ledger technology, such as blockchain, to keep track of payments sent between financial institutions.
In the application, J.P. Morgan notes that cross-border payments require “a number of messages” that must be sent between the bank and clearing houses involved in the transaction. This often results in delays and a restricted availability to the funds. Rather, the transaction on the blockchain would eliminate high costs, provide a system for accurately logging the transactions, and process payments in real time with a verifiably true audit trail.
This may come as a surprise given J.P. Morgan CEO Jamie Dimon’s tirade about Bitcoin several months ago, suggesting the cryptocurrency is “a fraud” and that he would fire any employee trading Bitcoin for being “stupid.”
But Dimon was careful to distinguish between cryptocurrencies and the blockchain because, well, J.P. Morgan has actually built its own blockchain on top of Ethereum. The bank is also one of 86 corporate firms to play a role in forming The Enterprise Ethereum Alliance, an open-source blockchain initiative. The idea of the EEA is for big banks and tech companies to come together and build business-ready versions of the software behind Ethereum, a decentralized computing network based on digital currency.
The patent filed in October is reminiscent of another Bitcoin-style payment system J.P. Morgan tried to patent in 2013. Although the patent was reportedly rejected, it’s fascinating to see the bank lay out some of the problems with the existing payment structure. For instance, “Furthermore, to date, there is no efficient way for consumers to make payments to other consumers using the Internet. All traditional forms of person-to-person exchange include the physical exchange of cash or checks rather than a real-time digital exchange of value. In addition, the high cost of retail wire transfers (i.e., Western Union) is cost prohibitive to a significant portion of society.”
Let’s see what happens the second time around.
BEIJING/HONG KONG (Reuters) – Smartphone and connected device maker Xiaomi [IPO-XMGP.HK] filed for a Hong Kong initial public offering on Thursday that could raise $ 10 billion and become the largest listing by a Chinese technology firm in almost four years.
Xiaomi’s IPO, which will be one of the first in Hong Kong under new rules to attract tech firm listings, is a major win for the bourse as competition heats up between Hong Kong, New York and the Chinese mainland.
The listing is expected to raise about $ 10 billion via the public offering, giving Beijing-based Xiaomi a market value of between $ 80 billion and $ 100 billion, people familiar with the plans told Reuters.
Those targets, if achieved, will make it the biggest Chinese tech IPO since Chinese internet giant Alibaba Group Holding Ltd (BABA.N) raised $ 21.8 billion in 2014.
Xiaomi’s prospectus gave investors the first detailed look at its financial health ahead of the much-hyped IPO, which could be launched as soon as end-June, according to the people close to the process who requested anonymity as the details were not yet public.
The numbers underscore how Xiaomi has remained resilient even as the global smartphone market has slowed, helped in part by a push overseas into markets like India.
The company said its revenue was 114.62 billion yuan ($ 18 billion) in 2017, up 67.5 percent against 2016. Operating profit for 2017 was 12.22 billion yuan, up from 3.79 billion yuan a year ago.
It made a net loss of 43.89 billion yuan versus a profit of 491.6 million yuan in 2016, though this was impacted by the fair value changes of convertible redeemable preference shares.
Alongside smartphones, Xiaomi makes dozens of internet-connected home appliances and gadgets, including scooters, air purifiers and rice cookers, although it derives most of its profits from internet services.
Xiaomi doubled its shipments in 2017 to become the world’s fourth-largest smartphone maker, according to Counterpoint Research, defying a global slowdown in smartphone sales.
It is also making a big push outside China’s borders, with 28 percent of its sales derived from overseas markets last year, up from 6.1 percent in 2015.
Yet margins on its smartphones are razor-thin. Xiaomi posted a gross profit margin of just 8.8 percent for its smartphone business in 2017 compared to 60 percent for its internet services business.
According to some analyst estimates, Apple’s flagship iPhone X and iPhone 8 have gross margins of around 60 percent.
The company makes the lion’s share of its profit – 60 percent – from internet services, including gaming and advertising linked to its homegrown user interface, MIUI, which had 190 million monthly active users as of March 2018.
Xiaomi’s listing plans come as the company and its investors look to capitalize on a bull run for the Hong Kong market, which has seen the benchmark Hang Seng Index rise about 27 percent over the past year.
Armed with the new rules allowing the listing of companies with dual-class structures, Hong Kong is eyeing several tech listings that are expected in the coming two years from Chinese firms with a combined market cap of $ 500 billion.
Xiaomi said in its IPO application the company would have a weighted voting rights (WVR) structure, or dual-class shares. The WVR give greater power to founding shareholders even with minority shareholding.
The structure would allow the company to benefit from the “continuing vision and leadership” of the dual-class share beneficiaries, who would control the company for its “long-term prospects and strategy”, it said.
Dual-class shares have been a contentious topic in Hong Kong since the city’s strict adherence to a one-share-one-vote principle cost it the float of Alibaba, which instead listed in New York.
Xiaomi is also likely to be among the first Chinese tech firms seeking a secondary listing in its home market, using the planned China depositary receipts route, two people with knowledge of the matter said.
CLSA, Morgan Stanley and Goldman Sachs Group Inc are sponsoring Xiaomi’s IPO.
($ 1 = 6.3610 Chinese yuan renminbi)
Reporting by Cate Cadell in Beijing, Julie Zhu in Hong Kong and Rushil Dutta in Bengaluru; Writing by Sumeet Chatterjee; Editing Stephen Coates
HONG KONG (Reuters) – A Hong Kong arm of embattled Chinese tech conglomerate LeEco has filed a petition to the territory’s high court to wind up the company, media in the Asian financial hub said on Thursday.
LE Corporation Limited, a unit of LeEco, has applied to liquidate the business according to court documents, government-owned Radio Television Hong Kong and other local media said.
LE Corporation could not immediately be reached for comment. The customer service hotline listed on its website did not appear to be working.
LeTV Sports Culture Develop (Hong Kong) CO. Limited, another LeEco unit in Hong Kong that broadcasts sports events, said on its Facebook page that its operations were unaffected by LE Corporation’s application for liquidation as it is a separate entity.
It said it would continue its NBA basketball and Premier League soccer broadcasting business in the city under the brand name LeSports HK.
LeEco, an entertainment, electronics and electric vehicles group founded by Jia Yueting, has struggled to pay its debts after rapid expansion led to a cash crunch, share price plunge and multiple defaults.
In Hong Kong, LeEco sold smart phones, internet TVs and online content. At its peak in early 2016, the group employed hundreds across several subsidiaries in the city, which was its Asia Pacific headquarters.
Cheng Shisheng, a Beijing-based spokesman for LeEco, told Reuters by phone that he now only works for LeEco’s car business and declined to comment on all matters related to LeEco Hong Kong’s situation.
Reporting by Sijia Jiang; Editing by Clarence Fernandez and Keith Weir