Double IPO as China’s Maoyan and Meituan Dianping Raise Cash in Hong Kong

China money and stock markets

Leading Chinese ticketing firm, Maoyan Weying has filed to launch an IPO in Hong Kong. So too has its former parent company Meituan Dianping, one of the world’s largest tech unicorns.

The Maoyan flotation, brokered by Bank of America and Merrell Lynch and China Renaissance Securities,  is expected to raise $1 billion of fresh capital, though that figure could change significantly. The company’s draft prospectus launched under the name Entertainment Plus, is heavily redacted and does not include a timetable for the sale, nor crucial details about the proportion of shares to be sold or the offer pricing.

The new cash would allow Maoyan, which last year merged with rival Weying, to keep up its fight for market share against Alibaba’s Tao Piao Piao. Maoyan claimed that it is the biggest supplier of cinema tickets, with a 60% market share, and that it has 130 million monthly active users. Maoyan raised $145 million (RMB1 billion) in a funding round last November, led by Tencent at the time of absorption of Weying. Weying itself was partially backed by the social media giant.

Online ticketing, with mobile apps to the fore, accounts for the vast majority of cinema tickets sold in China. Latest data shows that the Chinese box office continues to grow. It is up 17% so far this year, according to data from Ent Group.

The power of the ticketing platforms to cross-promote other services such as e-commerce and merchandising, and to generate vast amounts of data on the cinema industry keep the businesses attractive despite their losses. Alibaba claims part of the success of “A Dog’s Life” and the currently on release “Mission: Impossible – Fallout” is attributable to its ability to read the market and promote films accordingly.

Maoyan Weying’s prospectus shows full year losses of $11.1 million (RMB76 million) in the full year of 2017, and $17.1 million (RMB117 million) in the Jan.-June 2017. Those losses deepened to $33.7 million (RMB231 million) in the first half of 2018.

At the end of last week Meituan Dianping confirmed the offer price for its more advanced IPO plans. It aims to raise $4 billion of fresh cash and start trading with a valuation of $46 billion – $55 billion.

Meituan Dianping “founded and incubated” Maoyan, but divested it from July 2016, selling a 67% stake for $627 million (RMB4.3 billion). It followed that by selling a further 19.7% for $262 million (RMB1.8 billion) in Aug 2017.

Meituan Dianping, which has a range of online businesses with food delivery its largest segment, currently retains an 8.6% stake. Other core shareholders include Enlight Media with 49% and Tencent on 16%.

Meituan’s prospectus explains the ongoing relationship between the two groups. It says that they two have a five-year exclusive co-operation agreement, that runs until July 2021, in which Meituan will drive traffic and other resources to Maoyan.