Hong Kong billionaires Li Ka-shing, Joseph Lau and Adrian Cheng subscribe to Meituan Dianping’s US$4.2 billion IPO

Hong Kong billionaires Li Ka-shing, Joseph Lau Luen-hung and Adrian Cheng Chi-kong have put their faith in Meituan Dianping’s HK$33.14 billion (US$4.2 billion) IPO – the city’s second largest tech offering this year.

Meituan, an online platform offering services ranging from movie ticketing to food delivery, has priced its initial public offering at HK$69 per share, near the top of the indicative range of HK$60 to HK$72, according to sources.

Li Ka-shing, the city’s richest man known affectionately as “Superman” for his ability to pick winners, has subscribed to the IPO under the international placement tranche, the sources said.

Joseph Lau Luen-hung, former chairman of Chinese Estates and Adrian Cheng, executive vice-chairman of New World Development, appear to also have been convinced of Meituan’s potential.

Hillhouse Capital and Tiger Fund, the existing investors of the Beijing-based company, have subscribed to the offering.

Meituan’s HK$33.14 billion fundraising will make it Hong Kong’s second blockbuster tech float this year after Chinese mobile phone maker Xiaomi, and possibly the biggest for an internet services company since Tencent Holdings, which raised US$200 million in 2004.

If the company exercises an over-allotment option, the IPO value could rise by 15 per cent to US$4.8 billion. That would make Meituan’s listing the third largest in Hong Kong this year, after telecoms tower operator China Tower and Xiaomi.

At the offer price, Meituan is seeking a valuation of around US$52.4 billion – 75 per cent above its most recent fundraising round last October, when it was valued at US$30 billion.

The stock is expected to start trading on Hong Kong’s main board from September 20.

Market observers, however, are a bit cautious about the IPO’s prospects.

“I understand some of the tycoons are interested in subscribing however, for the general public, the market sentiment is not optimistic and that affects the market response,” said Gordon Tsui, managing director of Hantec Pacific.

“The pricing is more than expected, and the general market is suffering from negative news like the trade war and an unstable yuan. They have suffered from the downside of the market and may not have new funding to subscribe.”

The internet firm will also become the second listed company on the Hong Kong stock exchange to have a weighted voting rights share structure, which gives founders greater voting power over minority shareholders.

Five cornerstone investors had previously agreed to invest a combined US$1.5 billion, according to its prospectus.

New York-based investment firm Oppenheimer Fund is the largest cornerstone investor, committing US$500 million.

Tencent, which already owns a 20 per cent stake in Meituan, is investing US$400 million.

London-based hedge fund Lansdowne Partners and New York-based asset manager Darsana Capital Partners have agreed to put in US$300 million and US$200 million respectively.

China Structural Reform Fund, a state-owned restructuring fund backed by shareholders including China Chengtong Holdings, China Merchants Group and China Mobile, will invest US$100 million.

Additional reporting by Louise Moon