Alibaba Group Holding Ltd (BABA) Backed Meituan Raises $700 Million
Meituan.com, the Chinese group-discount website is partly owned by Alibaba Group Holding Ltd (NYSE:BABA), is in the news with a new round of funding. The company that offers discounts similar to Groupon Inc (NASDAQ:GRPN) has about 20 million active daily mobile users.
Chief Executive Officer Wang Xing recently noted that the company is focusing on food-delivery, movie tickets, hotels and similar business areas where people transact frequently. Wang also affirmed the plans for initial public offering are underway, but still a ways off.
Meituan.com recently raised $700 million from unidentified investors, making the company now worth $7 billion. The company is expecting transaction volumes to reach 100 billion Yuan or $16.1 billion this year and surpass 1 trillion Yuan by 2020. At the end of 2014, the company had reported transaction volumes of 46 billion Yuan.
Alibaba Group Holding Ltd (NYSE:BABA)’s investment would certainly help the company boost its business into China’s surging middle class, targeting more and more people seeking deals for restaurants and entertainment. Meituan.com’s mobile platform currently accounts for about 90% of the company’s transactions.
The company offers deals and discounts across 1,000 cities, highlighting its rapid expansion drive from just about 300 cities a year ago. The company competes with the like of Dianping.com, which is backed by Asia’s second-largest Internet Company, Tencent Holdings Ltd.
Meituan.com controls about half of China’s group-buying market in terms of gross merchandise volume, reported TechNode. As far its competitors are concerned, Dianping and Nuomi have about 21% and 13% of China’s group-buying market, respectively, followed by LaShou and 55Tuan having single digit percent share combined.
Meituan.com enjoys the reward for being an early entrant among the Chinese group-buying sites. The company started its operations in March 2010 inspired by the success model of Groupon Inc (NASDAQ:GRPN) in the U.S. The company’s strategic marketing initiatives focused around online marketing and disciplined spending for marketing also contributed to its success.
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