Shanghai-based Pinduoduo said on Tuesday that a number of long-term investors have agreed to purchase newly issued Class A ordinary shares worth USD 1.1 billion through private placement, according to a press release issued by the company.
The new shares will represent approximately 2.8% of the company’s total outstanding shares, said the company, adding that the transaction is expected to close in early April.
“It is expected that the share issuances will be exempted from registration under the Securities Act of 1933, as amended,” said Pinduoduo in the press release, without disclosing further details.
This private placement comes as the competition between Alibaba and Pinduoduo is escalating. Pinduoduo itself is mired in heavy financial losses.
“The extra funding gives us the strategic flexibility to capture opportunities to further benefit our users, as we bring interactive experiences, such as our new live-streaming features, and a wider variety of value-for-money products to them,” said Pinduoduo’s vice president of strategy David Liu.
Pinduoduo planned a sale for USD 1 billion worth of convertible bonds last September. The bonds were over-subscribed many times over, so they would bear no interest, KrASIA reported.
The report was updated on April 1 to include Pinduoduo’s statements.
This article is part of KrASIA’s “China Brief” section, where KrASIA’s reporters will provide quick daily updates about the tech ecosystem in China.