Tencent-backed fashion app said to be seeking IPO in US

China's Tencent is said to be keen on developing e-commerce via its partners, such as online fashion retailer Meilishuo. Sources say the latter's planned IPO could value it at about US$4 billion (S$5.25 billion).
China's Tencent is said to be keen on developing e-commerce via its partners, such as online fashion retailer Meilishuo. Sources say the latter's planned IPO could value it at about US$4 billion (S$5.25 billion).PHOTO: BLOOMBERG

HONG KONG • Yet another Chinese technology company is headed for an initial public offering (IPO).

Meilishuo, the online fashion retailer backed by Tencent Holdings, is in talks with several investment banks about a United States IPO that could value the start-up at about US$4 billion (S$5.25 billion), according to people familiar with the matter.

The women-focused online retailer hosted a bake-off to discuss IPO prospects with potential advisers and underwriters, the people said, asking not to be identified talking about private negotiations.

Meilishuo, which merged with rival Mogujie in 2016 to form a company with US$3 billion in sales, was said to have been valued at US$3 billion at the time of that deal.

The company, whose name means "Beauty Talk", is one of the more popular fashion and cosmetics retailers online, a niche it has clung to despite the dominance of Alibaba Group Holding and JD.com.

Meilishuo's envisioned US$4 billion valuation is an initial target and could change if a deal proceeds, the people said.

It is one in a growing wave of Chinese technology companies looking to sell shares to the public.

Smartphone maker Xiaomi Corp is seeking a valuation of as much as US$100 billion in a much-anticipated offering, people familiar with the matter have said, while Meituan Dianping, a Chinese food review and delivery giant also backed by Tencent, has begun discussions about a Hong Kong IPO at a valuation of at least US$60 billion.

"Tencent wants to develop e-commerce via its partners, so Meilishuo could get a lot of resources and help," said analyst Li Yujie of RHB Research Institute in Hong Kong. "It still depends on how the overall market performs, but (for) e-commerce, sector-wise, it would be a good year to fetch a good valuation."

Meilishuo, which did not respond to requests for comment, was said to have considered a US listing as early as two years ago.

Most of China's largest tech firms have picked New York for their debuts, seeking the wide investor base and higher international profile that an American listing confers. Beijing however is now encouraging many of those same firms to also list shares on Chinese exchanges.

Founded in 2009, Meilishuo runs an online marketplace selling clothes, shoes and handbags. As of 2016, it had about 15,000 merchants on its website and a mobile application that had been downloaded 100 million times. That year, it merged with Mogujie, which had about 130 million registered users.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on April 17, 2018, with the headline 'Tencent-backed fashion app said to be seeking IPO in US'. Print Edition | Subscribe