Widely considered in China as the "Amazon for Services, tech giant Meituan recently confirmed that the company will be pushing forward with its plan for an Initial Public Offering (IPO). The decision came in as quite a shock for many in the industry as it was recently reported that the tech industry in China is facing quite a downturn.
Meituan Dianping is China's premier provider of what is called a multiservice "online-to-offline" platform. This particular platform provides almost commodity, ranging from food delivery services to airplane tickets.
Meituan Dianping confirmed that the IPO will take place on Sept. 20. The company is seeking to achieve a $55 billion valuation from Hong Kong IPO.
Despite the enthusiasm of the company, many are having second thoughts about the plan for the IPO. Many observers have pointed out that China's tech industry is already very crowded. High-value markets already have their own established tech platforms. On the other hand, startups are also popping up from almost anywhere.
Still, many analysts are projecting a positive outcome for the IPO. Many believe that Meituan Dianping offers a unique platform, a feature that makes it an interesting pick for investors.
With its recent decision to push through with the IPO, Meituan Dianping will stand as the second company to take advantage of the newly approved regulations which allow companies to offer weighted voting rights for those in Hong Kong. The company plans to raise $4.4 billion by issuing 480 million Class B shares. Each of these shares will allow the shareholder to one vote.
On the other hand, the company will also issue Class A shares which are worth 10 votes each. These Class A shares will be owned by Meituan Dianping's Chief Executive Officer Wang Xing and two other executives holding top positions.
In order to lure investors, Meituan Dianping is focusing on its core business: food delivery. The company has recently pulled back some of its expansion projects in order to focus on its core business. It is important to note that Meituan Dianping controls 59 percent of China's food delivery market. A very lucrative market which is currently valued at $40 billion.
Prior to Meituan Dianping's recent rise in the tech and public trade industry, Xiaomi, another Chinese tech giant, was the first to list dual class shares in Hong Kong. The smartphone giant was able to achieve this status earlier this year.
