Meituan-Dianping to remain a favorite among investors: experts
Domestic online booking and discount platform operator Meituan-Dianping, which has been likened to a mix of US-based Yelp and Group-on, announced Tuesday that it has secured more than $3.3 billion in a financing round.
A PR representative of the company confirmed the information to the Global Times but declined to disclose details concerning Meituan--Dianping's valuation.
However, according to a report from domestic news portal tech.qq.com, the company was worth $15 billion before the financing and will now be valued at $18 billion.
The investors include domestic Internet giant Tencent Holdings, Russia-based investment firm DST and US venture capital firm Sequoia Capital, the report said.
Experts said Tuesday that the company will use the funds to improve its traditional business and pay for future development.
"It is the largest non-IPO funding round ever for the industry. The majority of the proceeds will go to building up its online-to-offline (O2O) food delivery platform, since the domestic O2O food delivery market has been growing rapidly," said Liu Xuwei, an analyst at Analysys International.
Liu told the Global Times on Tuesday that the sector is bound to keep growing and Meituan--Dianping will continue to need money for this business.
The company was formed in October 2015 when Meituan, a group-buying website backed by domestic Internet titan Alibaba Group Holding, merged with its competitor, Dian-ping, a local life information provider backed by Tencent Holdings. The two services in this case operate separately.
Meituan will continue to focus on the traditional dining sector, while Dianping will highlight segments such as catering for weddings, conferences and exhibits, according to tech.qq.com.
The tie-up is likely to see the pair combining resources to combat their domestic rivals, such as Nuomi, run by search engine giant Baidu Inc, and start-up ele.me.
Meituan-Dianping has a strong competitive edge over Nuomi and ele.me thanks to its large customer base and the popularity developed from its group-buying service, Liu said, but noting that "ele.me is a rising star that may compete with Meituan as its food delivery service is developing well."
Although faced with competition in some specific businesses, Meituan-Dianping still plays a leading role in the daily services sector as its dining, food delivery and movie ticket services account for 85 percent, 40 percent and 45 percent in their markets respectively, the report from tech.qq.com said.
As China's largest O2O daily deal service platform, Meituan--Dianping will continue to be favored by investors, Liu noted.
While aiming to diversify and improve its competitive edge, Meituan--Dianping will expand into such services as hotels and tourism, and it will launch a payment service soon, Li Dongcheng, an independent analyst in Beijing, told the Global Times on Tuesday.
"Meituan-Dianping succeeded by learning from its US counterparts like Groupon, and the company has global ambitions as well," Li said.
The company plans to get listed in the next two to three years, tech.qq.com reported.
