Pinduoduo to raise US$6.1bn to invest in online produce business, smart manufacturing

Shanghai-based Pinduoduo prepared to invest capital and resources to ‘capture key opportunities’ in areas like online grocery shopping, responsive manufacturing

Announcement of plans to raise new funding comes a week after social e-commerce giant reported first quarterly profit since it went public in 2018

Reading Time:2 minutes

Shanghai-based Pinduoduo reported sales of 14.2 billion yuan (US$2.14 billion) in the September quarter, its first quarterly profit since the company went public in 2018. Photo: Reuters

Published: 5:07pm, 18 Nov 2020Updated: 11:37am, 19 Nov 2020

Chinese social e-commerce giant Pinduoduo plans to raise US$6.1 billion in new financing through shares and convertible bonds to invest in opportunities in online agriculture and responsive manufacturing.

“The company expects to use the proceeds to strengthen its balance sheet and pursue growth by making strategic investments in infrastructure, expanding business operations, making future acquisitions and entering partnerships,” the Nasdaq-listed company said in a press release on Tuesday.

Pinduoduo is offering US$1.75 billion in convertible senior notes that are due in 2025, and priced its increased offering of 28.7 million American Depositary Shares (ADS) at US$125 per share. There is a 30-day overallotment option for US$250 million of notes and 4.305 million ADS, taking the total fundraising amount to US$6.1 billion including over-allotments, according to a Wednesday statement.

The announcement comes a week after Shanghai-based Pinduoduo reported sales of 14.2 billion yuan (US$2.14 billion) in the September quarter, its first quarterly profit since the company went public in 2018.

“We are seeing large-scale changes in consumer habits as a result of Covid-19, which are accelerating digital transformation across different sectors,” Pinduoduo CEO Chen Lei said in the statement on Tuesday. “We are prepared to invest capital and resources to improve our platform and build infrastructure to capture key opportunities.”

Chen said during the company’s earnings conference call last week that the company will invest in building new logistics infrastructure just for agricultural produce, noting that existing logistics networks were not optimised to ship delicate produce such as leafy vegetables and delicate fruit.