- Shanghai-based Pinduoduo will issue new Class A ordinary shares representing about 2.8 per cent of its total outstanding shares to ‘certain long-term investors’
- The fundraising will bolster the company’s strategic flexibility for expansion, it says
Chinese e-commerce platform Pinduoduo has raised US$1.1 billion in a private share placement that could fund its expansion despite current market volatility, the company announced on Tuesday.
The transaction for the newly issued Class A ordinary shares, which represent about 2.8 per cent of the company's total outstanding shares, is expected to be closed with "certain long-term investors" in early April, it added in a press release, without naming the investors.
The announcement comes at a time of global market volatility due to fears and disruptions linked to the coronavirus pandemic.
But Pinduoduo said in a statement that it believes that "during times of uncertainty, there are attractive opportunities".
"The extra funding gives us the strategic flexibility to capture opportunities to further benefit our users as we bring interactive experiences, such as our new live-streaming features and wider variety of value-for-money products to them," said David Liu, vice-president of strategy.
Pinduoduo pushes more resources to support merchants amid coronavirus crisis
Shanghai-based Pinduoduo has used strategies such as offering consumers deeper discounts on mostly generic products if they buy in groups to gain a huge following.
Pinduoduo, China's third-largest e-commerce company after Alibaba Group Holding " the parent company of the South China Morning Post " and JD.com, said its user base grew in the fourth quarter of last year with a 77 per cent year-on-year increase to 481.5 million monthly active users.
In 2019, 585.2 million users placed orders on Pinduoduo's platform, the company also said earlier this month.
In the statement on Tuesday, Pinduoduo said it had a "strong cash position", with a positive operating cash flow for the past few years.
As of the end of 2019, its net cash on hand amounted to 34.9 billion yuan (US$4.9 billion) and its net cash flow from operating activities was 14.8 billion yuan, almost double what it had at the end of 2018, according to the company.
Nasdaq-traded Pinduoduo is still loss-making, although its net loss narrowed to 1.7 billion yuan in the December quarter compared with 2.4 billion yuan in the same period in 2018.
It recorded a 91 per cent increase in fourth-quarter revenue to 10.8 billion yuan, up from 5.6 billion yuan a year earlier, but fell short of consensus analysts' estimates of 11.1 billion yuan.
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