BEIJING: Chinese firm Pinduoduo, an ambitious rival of e-commerce giant Alibaba, plans to raise about $1.5 billion from Wall Street to fund its expensive expansion.
The Shanghai-based company, which specialises in the sale of very low-priced goods, said in a stock market filing Tuesday that it intends to issue some 37 million new shares while stockholders sell about 14.8 million.
At its current Nasdaq stock price of around $29, the deal could allow the group to raise about $1.5 billion, according to a Bloomberg calculation.
Founded in 2015 by former Google employee Colin Huang, Pinduoduo had a dazzling start and successfully established a place between Alibaba and JD.com, the two titans of the Chinese e-commerce market.
His recipe: to allow users to participate in group purchases of everyday consumer goods, from kitchen utensils to socks to food, ultimately obtaining extremely cheap prices.
This niche of rock-bottom prices has ensured its popularity among the working classes and in rural areas.
Pinduoduo, with its social network features, also encourages customers to associate with each other, and with friends and relatives, to obtain better prices through group sales.
It made its stock market debut on Nasdaq last July, raising $1.6 billion.
The new funds would be used "to enhance and expand its business operations... including potential strategic investments and acquisitions", the firm said in the statement, without giving details.
Pinduoduo, which at the end of September claimed some 385.5 million active users -- more than doubled in one year -- recorded some $50 billion in annual transactions on its platform.
In the third quarter of 2018, it had a turnover of $491 million but has struggled to be profitable, recording a loss of $160 million in the same period.
Pinduoduo, sometimes compared to US discount retailer Costco, has seen its share price climb almost 50 percent since its debut in July.
But its shares fell more than six percent Wednesday after the announcement.
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