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Meituan-Dianping Raises Record $3.3 Billion To Fuel Market Grab
Meituan-Dianping, the top provider of on-demand services in China, has sealed a record-breaking $3.3 billion USD funding round, valuing the company at more than $18 billion USD. The funds will be used to consolidate their market share as competing powerhouses Alibaba and Baidu seek to boost their own services.
Investors in the latest round include Chinese tech giant Tencent Holdings Ltd., VC firm DST Global and Singapore state investment firm Temasek Holdings Pte Ltd, said the company on Tuesday.
The investment marks the biggest single private fundraising round ever snagged by a VC-backed startup. Last year China’s leading ride-hailing service Didi Kuaidi raised $3 billion USD, spurring speculation that a bubble was forming in the country’s booming offline-to-online sector.
Meituan and Dianping merged in October last year ending a savage industry rivalry propped up my massive subsidies from both companies. Meituan’s shareholders took on approximately 60 percent of the company following the match-up.
Meituan Dianping’s first major fundraising event since the merger also highlights the complex investment relationship between tech giants Alibaba Group Holding Ltd. and Tencent, both of whom held a stake in the newly joined company.
In November last year the Wall Street Journal cited unnamed sources who said that Tencent was planning to invest $1 billion in the new company’s latest round. At the same time, Alibaba – an early investor in Meituan, sought to sell their $1 billion USD stake and refocus efforts on their own on-demand service platform, Koubei.
Meanwhile Chinese search engine giant Baidu has also doubled down on their own on demand service, Nuomi. Last year Baidu committed to spending $3.2 billion on the service over three years. Both Nuomi and Meituan-Dianping are now scrambling for market share, spending heavily on subsidies to become the dominant platform in an increasingly competitive market.