By Julie Zhu
(Reuters) - Chinese online group discounter Pinduoduo plans to raise up to $1.63 billion from a U.S. listing, its latest filing with the U.S. Securities and Exchange showed, in what would be the second-biggest U.S. float by a Chinese firm this year.
Pinduoduo plans to sell about 85.6 million American Depositary Shares in an initial public offering (IPO) at a price range of $16 to $19 each, its filing late on Monday showed.
That values the three-year-old startup - which has yet to make a profit - at $20 billion to $24 billion, higher than its $15 billion valuation in April. Its free float will be 6.8 percent of enlarged share capital after a 15 percent "greenshoe" or over-allotment option which can be sold if there is demand, showed a term sheet seen by Reuters.
Two of the firm's main existing shareholders - Tencent Holdings Ltd (HK:0700) and Sequoia Capital - have each indicated an interest in buying up to $250 million worth of shares in the IPO, according to the filing.
The price range represents a 2020 price-to-sales ratio of 2.1–2.6 and a 2020 non-GAAP price-to-earnings ratio of 8.9–10.6, Thomson Reuters publication IFR reported.
The firm will open its book to investors on Tuesday and price the IPO on Wednesday of the following week, showed the term sheet. It expects to list on the Nasdaq under the symbol PDD.
Pinduoduo is the latest in a series of Chinese tech groups flocking to list offshore, seeking to replenish coffers amid ever-intensifying competition with domestic rivals, notably e-commerce firms Alibaba Group Holding Ltd (N:BABA) and JD.com Inc (O:JD), even as Sino-U.S. trade tension rattles global markets.
China's Meituan Dianping, an online food delivery-to-ticketing services platform which rivals Alibaba-backed Ele.me, is also looking to launch an IPO of over $4 billion in Hong Kong in coming months.
Pinduoduo, set up by former Google (NASDAQ:GOOGL) engineer Colin Huang in 2015, is also joining several sizable Chinese listings in New York this year. Chinese video streaming service provider iQiyi Inc (O:IQ) raised $2.42 billion from a Nasdaq IPO in March, and Tencent Music Entertainment, China's largest music-streaming firm, aims to raise up to 4 billion in a U.S. IPO in October.
In an initial filing, Pinduoduo, which allows consumers to group together to increase the discounts offered by merchants, said it had 103 million monthly active users of its mobile platform at the end of March.
Due to low-priced products and a larger user base in China's smaller cities, the firm's gross merchandise volume exceeded 100 billion yuan ($14.98 billion) last year, a milestone for Chinese e-commerce firms that took Alibaba's Taobao marketplace five years and JD.com 10 years to reach. Pinduoduo's revenue has grown sharply, reaching 1.38 billion yuan in January-March from 37 million yuan in the same period a year prior. Its net loss, however, remained broadly steady at 201 million yuan.
China Renaissance, CICC, Credit Suisse (SIX:CSGN) and Goldman Sachs (NYSE:GS) are advising Pinduoduo, according to the filing.