Meituan rebuffs rumors of Tencent withdrawing from funding round

Chinese O2O giant Meituan-Dianping has denied a recent media report that its major shareholder Tencent has withdrawn from its new round of financing which is said to be underway, claiming that the statement is erroneous and that the company as a whole has broken even.

Meituan Senior Vice President Chen Shaohui said that the company has not initiated a new financing round so far, nor has it had a listing plan, and the “Tencent withdrawal” statement is thus made without any factual basis.

Lin Haifeng, the General Manager of Tencent’s Merger and Acquisitions Department, also viewed the withdrawal statement as a pure rumor, and said that Tencent is bullish on future prospects of localized consumer services and Meituan’s continuous business layout in this space; and that Tencent and Meituan have been deepening their strategic cooperation.

Tencent was rumored to decline to lead a new financing round recently launched by Meituan, while other domestic investors were also holding back their money. This was speculated force Meituan to seek overseas financing to satisfy its huge appetite for funds.

Meituan reportedly received the cold shoulder largely due to its poor performance, which has made its investors view the continued investment into the O2O service as an unprofitable undertaking. In addition, Meituan’s expansion into the payment sector was said to be the other reason for Tencent pulling away from the rumored new financing.

Meituan gained a third-party payment license after it bought a third-party payment provider Qiandaibao (钱袋宝) last September, a move seen as part of its efforts to seek some independence from its major shareholder, and also one that may have infuriated Tencent, whose mobile payment service Tenpay was the runner-up player in the market with a 37% share. The parties may have had a rift since then, although Meituan ultimately returned to Tencent’s WeChat Pay as its payment service failed to gather steam.

Meituan, which started out as a group-buying website, has expanded into myriads of other verticals including food delivery, hotel booking, ride-hailing and short rental, backed by its roughly US$4.5 billion war chest built up from six funding rounds. Yet, it has also been confronted with cut-throat competition in each field it forayed into and failed to gain traction as a whole.

With all the lackluster business performance that comes with frequent reshuffles on its management team and corporate structure, it was reported that seven out of the company’s eight core members have left for one reason or another.

It’s worth mentioning that Tencent CEO Pony Ma publicly expressed confidence in news reading app Toutiao and car-hailing giant Didi, in which Tencent has made hefty investments as well, yet he never mentioned Meituan in such case.

To restore confidence, Meituan also released today its latest performance, claiming that the company saw over 18 million orders placed on a daily basis, with more than US$3 billion in cash reserves. And it has gathered 240 million active buyers and 3 million active merchants on an annual basis.