Two Chinese online grocery platforms – Missfresh and Dingdong Maicai – are aiming to raise smaller amounts from their US unitial public offerings (IPOs) than initially planned, reflecting concerns among investors about their growth outlook amid intense competition in the mainland’s on-demand delivery market.
Tencent-backed Missfresh is seeking to raise up to US$336 million from the sale of 21 million American depositary shares (ADS) on Nasdaq. The Beijing-based firm is marketing the ADS, representing three ordinary shares, to investors at a range of US$13 to US$16 each, according to its updated filing with the Securities and Exchange Commission on Tuesday.
Shanghai-based Dingdong Maicai, backed by Sequoia Capital and Tiger Global Management, is also seeking to raise as much as US$357 million from the sale of 14 million ADS on the New York Stock Exchange, marketing them at a range of US$23.50 to US$25.50 each. Every two ADS represents the firm’s three ordinary shares.
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Both companies had initially hoped to raise about US$500 million, people familiar with the transactions had said earlier this month.
Bankers involved in the two deals said the competitive operating environment, coupled with the fact that both operators continue to incur losses, have stoked concerns among prospective investors over the growth outlook of the grocery delivery platforms after the pandemic subsides.
Still, both IPOs are supported by their existing shareholders.
Missfresh, which is targeting a listing this month under the stock code “MF”, disclosed in the updated filing that it had secured an agreement from several investors to invest up to US$90 million in the stock sale.
They include an affiliate of existing shareholder China International Capital Corp, Tencent and venture capital manager Genesis Capital. If the deal gets priced at the midpoint of US$14.50 per ADS, these investors combined will take up about one-third of the shares available in the IPO.
There is an overallotment option for the underwriters to sell up to 3.15 million more ADSs. Underwriters of the deal include JPMorgan, Citigroup, CICC and China Renaissance. Missfresh booked net losses for three straight years up to 2020, according to its draft prospectus.
Dingdong Maicai’s underwriters include Morgan Stanley, Bank of America, Credit Suisse and HSBC. There is an option to sell up to additional 2.1 million ADSs. The stock will trade under the code “DDL” on the NYSE.
Four existing shareholders, including Tiger Global and Softbank have agreed to buy up to US$200 million worth of the offering, Dingdong said in its SEC filing.
Dingdong is also yet to post a profit, racking up net losses of 3.2 billion yuan (US$493 million) in 2020 and 1.9 billion yuan in 2019.
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