Meituan to raise $10bn in delayed deal after share price drop

Meituan, one of China’s largest internet companies, plans to raise about $10bn in an equity and debt deal delayed by a misfire that sent its shares tumbling last week.

The food delivery giant, which is backed by technology group Tencent, will raise about $7bn in equity and sell $3bn in convertible bonds.

The company will use the funds to develop autonomous delivery vehicles as it expands into areas such as groceries and ride-hailing, reflecting rapid consumer spending growth in China following a strong recovery from the coronavirus pandemic.

It is one of the largest capital raisings by a Chinese technology business this year. In February, Alibaba, Jack Ma’s ecommerce platform, brought in $5bn from a bond sale. The deals come even as Beijing has launched a far-reaching clampdown on monopolistic practices in China’s tech sector that has damped stock prices.

Meituan put the placement on hold last week after 300m of its shares, worth about $11bn — approximately 6 per cent of its equity — were moved into a Hong Kong stock exchange clearing account belonging to Goldman Sachs, according to two people familiar with the matter.

The people said the change, which is disclosed publicly and monitored by hedge funds, gave traders an early warning of the upcoming placement of Meituan shares that led to a 7.4 per cent drop in their price last Tuesday.

The company’s Hong Kong-listed stock has yet to recover fully and as of Monday’s close was still down 3 per cent from its level before last week’s fall.

Goldman Sachs declined to comment on the shares appearing in the bank’s clearing account last week. Meituan did not immediately respond to a request for comment.

After the market closed on Monday, Meituan said it plans to raise up to $6.6bn from a placement of 187m shares sold at HK$265-HK$274 each, and raise another $400m through a private placement to Tencent, already one of the group’s largest investors, according to terms seen by the Financial Times.

The company’s share price has slumped 37 per cent from a peak this year. Meituan is one of several technology giants used by analysts as a bellwether for the impact of China’s regulatory controls over the sector.

Last week, Beijing fined Alibaba $2.8bn after a four-month investigation into the company’s market practices. Meituan was one of about 30 tech groups that pledged to comply with China’s antitrust laws after a warning from Beijing on companies to follow enhanced regulations.