China delivery giant Meituan raises $10 bln - a warchest for drones, self-driving cars

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Food delivery behemoth Meituan (3690.HK) has raised $10 billion in a stock and convertible bonds sale, underscoring strong investor faith in the growth prospects of some Chinese tech firms despite a regulatory clampdown on the sector.

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Signs of Meituan are seen at its booth at the 2020 China International Fair for Trade in Services in Beijing, China, Sept. 4, 2020. REUTERS/Tingshu Wang/File Photohas raised $10 billion in a stock and convertible bonds sale, underscoring strong investor faith in the growth prospects of some Chinese tech firms despite a regulatory clampdown on the sector.

"Meituan will use most of the capital in updating its delivery system which currently relies on human drivers and will soon be unaffordable for the company as labour costs continue to rise in China, said Zhang Yi, head of consultancy iiMedia Research.Analysts also expect the company to shore up its community group bulk buying service, Meituan Select, which has been growing in popularity.

Most demand came from global long-only funds, hedge funds and Chinese investors, said the source, who declined to be named as the deal details were not public.The robust demand comes as Chinese regulators crack down on technology giants for a range of violations from monopolistic behaviour to flouting rules for handling customer data., for antimonopoly violations, while Meituan Select was among five platforms fined by China last month for improper pricing behaviour.

Food delivery in China, which brings in more than half of Meituan's total sales, has grown by more than five times since 2016 to be worth over 650 billion yuan , according to iResearch. Meituan's services also include restaurant review sites and bike-sharing.

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