Pinduoduo Announces Proposed Follow-on Public Offering
COVID-19 and China
Pinduoduo Announces Proposed Follow-on Public Offering. PHOTO: Credit to Unsplash

Feb 5, 2019, Pinduoduo (拼多多), a Chinese social e-commerce platform allowing users to participate in group buying deals, announced its intention to offer and sell l 37,038,000 American Depositary Shares (“ADSs) and ) and another 14,815,000 ADS to "selling shareholders". 

For the 37,038,000 ADSs, each represents four Class A ordinary shares of the Company. While for the 14,815,000 ADSs, they are subject to market and other conditions, in an underwritten public offering. The underwriters will have a 30-day option to purchase up to an aggregate of 7,777,950 additional ADSs from the Company and the selling shareholders. 

It needs to be noticed that the founding team members, management and staff are still subject to a 3-year lock-in period and will not participate in this round of Follow-on Public Offering (FPO).

Deducting issuance costs, the total net proceeds raised from FPO will go over USD 1 billion. According to Pinduoduo website, proceeds raised will be used to enhance and expand its business operations - "New Brand Plan" and promotion of agricultural products, for research and development, and for general corporate purposes and working capital, including potential strategic investments and acquisitions.

The final offering price is expected to be settled on February 8, 2019. Goldman Sachs (Asia) L.L.C., Morgan Stanley, BofA Merrill Lynch, CICC (中金), and China Renaissance (华兴资本) will act as the joint bookrunners for the proposed ADS offering.

More on the prospectus related to the proposed ADS offering:

Agriculturally speaking, Pinduoduo has helped farmers to sell 10.9 billion kilograms agricultural products amounting CNY 51 billion (USD 7.5 billion) for the past three years. National Bureau of Statistics of China predicts that GMV for online agricultural product transactions will hit CNY 800 billion (USD 118 billion) by 2020, increased from CNY 150 billion to (USD 22 billion) back in 2015. HUANG Zheng (黄峥), CEO of Pinduoduo believes that AI+5G will be the driver bringing innovations to the agricultural field.

For the "New Brand Plan", Pinduoduo will support 1000 brands across various industries in terms of developing new products at a lower cost. Ending January 9, 2019, the first 20 brands factories on this program have completed manufacturing in a transparent way and enabled data sharing with Pinduoduo. In total, Pinduoduo received more over 1300 applications from factories and corporates who wish to join this program.

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