Less than a month after two of China’s largest on-demand services companies Meituan and Dianping came together in a landmark merger, Tencent Holdings Ltd. is seeking to invest $1 billion USD in the newly combined entity, according to sources who spoke to the Wall Street Journal.

The latest round could be up to $3 billion USD, which would bring the total value of the Meituan-Dianping joint venture to $20 billion USD.

The potential investment will up the stakes in an already capital drenched market of O2O providers. In June this year Baidu revealed they would be investing $3 billion USD in Nuomi, a service that competes in the same market as Meituan and Dianping.

China’s O2O companies, particularly those backed by Baidu, Alibaba and Tencent (BAT) have been spending aggressively in 2015 to lock down an early market share by subsidizing their services and offering promotions.

It’s not yet clear who else will participate in Meituan-Dianping’s latest multi-billion USD round led by Tencent, or whether Alibaba, who have a stake in Meituan, will take part.

Earlier September year, taxi-hailing company Didi-Kuiadi, a merger also backed by both Alibaba and Tencent, saw an additional $3 billion USD funding round including $740 billion USD from China’s sovereign wealth fund China Investment Corp. (CIC) as well as Ping An Ventures and Capital International Private Equity Funds.

As China’s O2O platforms continue to confidently pump billions into squaring off market share, it remains to be seen whether into these companies can live up to their valuations.

Aside form the Dianping-Meituan and Didi-Kuaidi mergers, 2015 has seen partnerships develop between Baidu (Qunar) and Ctrip, Alibaba and Youku and 58.com and Ganji.com.

The marriage between Dianping and Meituan ended the largest market rivalry between on-demand services, meaning further funding rounds could focus less on out-performing rivals through subsidies and more on other strategic moves in the market.

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Cate Cadell

Cate is a tech writer. She worked as a journalist in Australia, Mongolia and Myanmar. You can reach her (in Chinese or English) at: @catecadell or catecadell@technode.com

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