TCEHY Tencent Holdings Ltd (PK)

By Liza Lin and Stella Yifan Xie 

HONG KONG-- Fast-growing Chinese technology startup Meituan-Dianping applied to list in Hong Kong and seeks to raise billions of dollars to help finance its growth strategy in what is a highly competitive internet marketplace.

The Beijing-based online services provider is one of the country's most valuable private tech companies. Its current investors include Priceline Group Inc., the Canada Pension Plan Investment Board and Chinese social media and gaming firm Tencent Holdings Ltd. Meituan said it lost money last year but its revenue more than doubled, and it expects to maintain rapid growth as more Chinese consumers spend money online.

Meituan didn't disclose how much it plans to raise in the stock sale, but the company is targeting a valuation of more than $60 billion, according to people familiar with the matter. Companies listing in Hong Kong typically sell at least 10% of their shares when they go public. Goldman Sachs, Morgan Stanley, and Bank of America Merrill Lynch are the main banks handling Meituan's IPO.

In a filing with Hong Kong's stock exchange, Meituan said it generated 33.9 billion yuan ($5.2 billion) in revenue in 2017, up 161% from a year earlier.

The company posted a loss of 18.99 billion yuan last year, its prospectus said.

The company also said its adjusted net loss was 2.85 billion yuan in 2017, about half of what it was for the two years before that. The adjusted figure strips out share-based compensation expenses and gains and losses from investments, asset sales and discontinued operations. Meituan said it had 19.4 billion in cash equivalents at the end of last year.

Meituan's initial public offering, which is likely to occur in the coming months, is part of wave of expected listings by Chinese tech unicorns, a term used to describe private companies with valuations greater than $1 billion. Last week, Chinese smartphone maker Xiaomi Corp. set in motion a Hong Kong IPO that seeks to raise as much as $6.1 billion. It is aiming for a valuation of $55 billion to $70 billion.

Meituan, ride-hailing firm Didi Chuxing Technology Co. and mobile content firm Beijing Bytedance Technology Co. have been labeled by market participants as an up-and-coming trio of influential internet companies, behind giants like Tencent and Alibaba Group Holding Ltd.

Founded in 2010 by Chinese entrepreneur Wang Xing, Meituan has become one of the world's most valuable private startups by creating a platform that provides services to China's growing middle class. In 2015, it completed a merger with Dianping, a review site. The startup was valued at $30 billion in October after it raised $4 billion from investors in China, the U.S. and elsewhere.

The Chinese internet firm doesn't have a single equivalent counterpart in the U.S. Instead, it sells vouchers like Groupon Inc., provides reviews and listings like Yelp Inc. and offers food delivery like Grubhub Inc. It also sells movie tickets and offers hotel and travel bookings. Meituan said it served 310 million "transacting users" last year, referring to customers who made at least one transaction on its platform.

Its food-delivery service competes with an Alibaba unit for dominance. Both firms offer discounts to attract and retain customers. And a recent foray into ride hailing could provoke a costly fight with Didi, which is backed by Japan's SoftBank Group Corp.

Along with revenue from deliveries, the company makes money from selling ads to merchants. Other revenue streams include taking commissions from sales of discount vouchers and selling business services to Chinese merchants seeking to digitize their operations.

Meituan had a 59% share of China's "on demand" food delivery market in the first quarter of this year, according to data from iResearch Consulting Group that was cited by the company. Alibaba's Ele.me delivery unit is Meituan's biggest competitor in China.

Write to Liza Lin at Liza.Lin@wsj.com and Stella Yifan Xie at stella.xie@wsj.com

(END) Dow Jones Newswires

June 25, 2018 00:02 ET (04:02 GMT)

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