Group think

17 July 2018 By Alec Macfarlane

Shanghai-based Pinduoduo is seeking a $20 bln valuation in a New York debut. Sales are surging, but its social-networking e-commerce business model targeted at lesser-known areas of China may perplex overseas investors. Unwelcome comparisons to Groupon and Zynga are possible.

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Pinduoduo, a social e-commerce company backed by Chinese internet giant Tencent, is planning to raise up to $1.9 billion in an initial public offering in New York, according to documents filed with U.S. securities regulators on July 16.

The Shanghai-based startup is selling 85.6 million American depositary shares for between $16 and $19 each. Another 12.8 million ADS are available to the IPO’s underwriters. Each ADS represents four Class A shares. The company also has a second class of stock.

Pinduoduo generated revenue of 1.4 billion yuan ($221 million) in the first three months of 2018, up from 37 million yuan during the same period in 2017. The company also reported an operating loss of 253 million yuan during the same period, wider than the 216 million yuan it lost in the same period a year earlier.

Credit Suisse, Goldman Sachs, China International Capital Corp and China Renaissance are underwriting the IPO.

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