Dingdong, a China-based grocery delivery app developer which counts corporates Bertelsmann, Red Star Macalline and SoftBank as backers, raised $95.7m in an initial public offering on the New York Stock Exchange on Tuesday.
The company priced just over 4 million American depositary shares (ADS), with every two ADS representing three class A ordinary shares, at the bottom of the IPO’s $23.50 to $25.50 range.
The number of shares in the offering was downgraded from 14 million but the shares closed at $23.52 on its first day of trading and $38.30 yesterday. Reuters reported earlier this month the company was targeting $500m, citing three people with direct knowledge of the matter.
Formerly known as Dingdong Maicai, Dingdong was founded in 2017 and operates an online marketplace platform that lets users order deliveries of fresh groceries to their homes.
The company generated $1.7bn of revenue in 2020, almost triple the amount reported the year before, but its net loss rose 70% to $485m in the same period.
Dingdong will use about half of the IPO proceeds to increase penetration in existing markets and enter new markets, while 30% will go towards enhancing its upstream procurement capabilities. It will also invest 10% of the proceeds in its technology and supply chain systems.
The company had accumulated at least $1.3bn in funding prior to the flotation. It raised $330m last month in a series D-plus round led by internet and telecommunications group SoftBank’s Vision Fund, following a $700m series D round in May this year co-led by investment firm DST Global and investment manager Coatue.
The series D round was also backed by Capital Today, CMC Capital, General Atlantic, Hony Capital, Ocean Link, Sequoia Capital China, Tiger Global Management, 3W Fund Management, APlus Partners, Aspex Management, Cygnus Equity and Mass Ave Global.
Dingdong had previously pulled in $300m through a May 2020 round led by General Atlantic valuing it at $2bn.
Bertelsmann Asia Investments, a corporate venture capital subsidiary of media group Bertelsmann, contributed to a series B round of undisclosed size for the company in mid-2019 that included Capital Today, Sequoia China, Tiger Fund and Qiming Venture Partners.
In November 2018, Dingdong raised an undisclosed sum from Gaorong Capital, which had backed a series A-plus round of undisclosed size for the business two months earlier.
The company also received an undisclosed amount in a series A round featuring furniture retailer Red Star Macalline and Fortune Capital in July 2018.
Changlin Liang, founder and CEO of Dingdong, will remain its largest shareholder despite having his stake reduced from 15.7% to 15.4%. Liang also controls a separate vehicle called EatBetter Holding, which now owns an 11.4% stake.
Tiger Global holds a 5.6% stake while General Atlantic and SoftBank each have 5.5%, CMC Capital Partners 5.2% stake and Capital Today 5%.
Morgan Stanley, BofA Securities, and Credit Suisse Securities are joint bookrunners for the offering, while Mission Capital Management is also an underwriter. They have a 30-day option to purchase just over 610,000 additional ADSs, which if exercised would increase the IPO size to approximately $110m.