Tencent-backed Pinduoduo to raise $6.1b to strengthen online produce business

Social commerce platform Pinduoduo is planning to raise as much as US$6.1 billion in a new equity and financing round as the company strengthens its grassroots in selling farm goods online.

The China-based firm offered over US$1.7 billion in convertible senior notes that are due in 2025. It priced its increased offering of 28.7 million American depositary shares (ADS) at US$125 a piece, the company said in a statement. The offer was oversubscribed.

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Headquartered in Shanghai, Pinduoduo provides buyers with low-cost merchandise and an interactive shopping experience. It’s also leveraging the online migration of grocery shopping as the pandemic continues to loom large globally.

The ecommerce company has spent five years adding to the value chain by creating demand for fruits and vegetables directly from farmers, leaving traditional markets and supermarkets out of the loop.

“We are seeing large-scale changes in consumer habits as a result of Covid-19, which are accelerating digital transformation across different sectors,” said Chen Lei, chief executive officer of Pinduoduo.

The capital raise comes after the social commerce platform reassured investors by logging a little over US$2.1 billion in sales in the September quarter, surpassing the over US$1.8 billion average of Bloomberg estimates.

The company also looks to help manufacturers with branding and connect them to consumers, as well as provide resources to established firms and help them incubate sub and heritage brands.

Pinduoduo has raised a total of US$3.8 billion in funding over six rounds, with Chinese tech giant Tencent backing the technology platform.

See also: Explaining Pinduoduo, and whether the model can work in Southeast Asia