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Two fresh-food delivery firms plan US listings
Last Updated: 2021-06-10 08:27 | China Daily
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Fresh-food delivery firms Miss-Fresh and Dingdong Maicai are vying with each other to raise funds via IPOs on United States bourses, as competition in the Chinese online grocery delivery segment is intensifying, experts said.
 
MissFresh, backed by tech giant Tencent Holdings, plans to raise funds from the Nasdaq through a listing of its American depositary shares. The company is likely to raise $500 million to $1 billion from the share sale, according to Bloomberg.
 
Dingdong Maicai plans to list its shares on the New York Stock Exchange, according to its filing. The Shanghai-based e-grocer is backed by investors like Sequoia Capital and Tiger Global Management.
 
"The COVID-19 pandemic has fueled rising demand for online purchases of fresh food. Companies like MissFresh and Dingdong Maicai are looking to raise funds to support the future growth of their businesses in the country's highly competitive online grocery sector," said Kong Rong, chief analyst of TF Securities.
 
China's online grocery market grew by 32.7 percent on a yearly basis during the first quarter of last year, said a recent report from global consultancy PricewaterhouseCoopers.
 
Established in 2014, MissFresh has created front-end warehouse deliveries, through which it can offer fresh food deliveries from its 631 warehouses across 16 cities. Front-end warehouses refer to small stations located close to shopping communities and neighborhoods, which help in speedy deliveries.
 
Wang Peng, an associate professor at the Hillhouse Research Institute of the Renmin University of China in Beijing, said: "Fresh food is a trillion-yuan scale market and also a high-frequency portal for online community retail. Capabilities based on digital and supply chains will become the only underlying driving factor for sustained and healthy growth, and also act as the core competitive barrier in the future."
 
MissFresh was the market leader in China, in terms of gross merchandise volume in the nation's on-demand warehouse retailing industry, said a recent iResearch report. The company said in December that it has raised 2 billion yuan ($305.6 million) of strategic investment from a Qingdao government fund while Dingdong Maicai raised $330 million in a latest funding round led by SoftBank Vision Fund.
 
"However, Dingdong Maicai and MissFresh both face bottlenecks in being profitable. Unlike other business models for group purchases, which are able to generate steady cash flows, building front-end warehouse is an expensive proposition," said Wang.
 

(Editor:Wang Su)

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Two fresh-food delivery firms plan US listings
Source:China Daily | 2021-06-10 08:27
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