China's Meituan-Dianping taps three Wall Street banks for HK listing: sources

HONG KONG (Reuters) - China's largest provider of on-demand online services, Meituan-Dianping, has tapped Bank of America Merrill Lynch (BAML), Goldman Sachs Group Inc GS.N and Morgan Stanley MS.N to work on a Hong Kong float that could see it list as early as later this year, five people with knowledge of the move said.

Meituan-Dianping, an online platform for ordering food and booking movies and restaurants, has recently started preparatory work, aided by the three Wall Street banks, for the initial public offering (IPO), the people told Reuters.

No formal mandate to investment banks for managing the IPO has been awarded yet, they said.

The company, formed in 2015 from the $15 billion merger of Groupon-like Meituan and Yelp-like Dianping, is looking to benefit from the bull run in technology stocks, said three of the people.

The Hong Kong-listed shares of existing investor Tencent Holdings Ltd 0700.HK, for instance, have risen about 90 percent over the past year, outpacing a 51 percent rise in the benchmark Hang Seng Index.

In October, Meituan-Dianping was valued at $30 billion following a $4 billion funding round led by Tencent. The people said it was too early to determine an IPO valuation as discussions are still at a preliminary stage.

Beijing-based Meituan-Dianping, BAML, Goldman and Morgan Stanley declined to comment. All the people declined to be identified as discussions related to the IPO are confidential.

Reuters reported in November that Meituan-Dianping, which offers a broad range of services including travel packages, was considering an IPO in the United States as soon as this year.

The company has however shifted focus to Hong Kong, the people said, as the city’s exchange operator is about to allow dual-class shares, which potentially allow founders to weight share voting rights in their favor.

Led by serial entrepreneur Wang Xing, Meituan-Dianping’s backers also include Sequoia Capital Ltd, Singaporean state investors GIC Pte Ltd [GIC.UL] and Temasek Holdings (Pte) Ltd [TEM.UL], as well as DST Global and the Canada Pension Plan Investment Board.

The IPO proceeds could help boost the firm's firepower for investments in offline retail and artificial intelligence, said one of the people, pitching it against China's leading e-commerce players including Alibaba Group Holding Ltd BABA.N and Inc JD.O.

Meituan-Dianping last month said it had about 320 million active buyers and more than 4 million merchants with total revenue reaching $5.4 billion last year. It did not disclose details about profitability.

The $30 billion valuation ranked the firm as the world’s fourth-largest “unicorn” - technology start-ups valued at $1 billion or more - according to data and analytics provider CB Insights.

Reporting by Julie Zhu and Fiona Lau of IFR; Editing by Sumeet Chatterjee, Jennifer Hughes and Christopher Cushing