Tencent Boosts Stake in Grocery App Xingsheng Youxuan
(Bloomberg) -- Tencent Holdings Ltd. has increased its stake in Xingsheng Youxuan, investing $100 million in the Chinese online grocery startup at a valuation of about $5 billion, according to people familiar with the matter.
Xingsheng Youxuan is also in talks with other investors including Beijing Kuaishou Technology Co. to potentially raise more funds, the people said, asking not to be identified as the matter is private.
Tencent's investment comes as community buying platforms are seeing a surge of fundraising, and arrives less than a month after e-commerce giant JD.com Inc. bought into the produce delivery app with a $700 million capital injection, according to an exchange filing.
Investors including Tencent and private equity firm Primavera Capital joined a funding round in Xingsheng Youxuan at a $3 billion value, Bloomberg News reported in June.
The current funding round could precede an initial public offering, though details such as timing and listing venue are still not finalized, the people said.
Representatives from Tencent, Xingsheng Youxuan declined to comment. A representative for Kuaishou could not immediately comment.
Located in Changsha, the capital city of Hunan province, Xingsheng Youxuan is an online group buying platform that lets community groups in neighborhoods or districts save money by coordinating bulk orders of fresh food and other daily necessities. It operates in 13 provinces in China and counts KKR & Co., Sequoia Capital and Temasek Holdings Pte among its existing backers, its website shows.
Community group buying of fresh groceries is attracting billions in startup investment. Xingsheng Youxuan's rivals include Beijing MissFresh Ecommerce Co., which is also backed by Tencent, and Chinese retail giant Wumei Holdings Inc.'s Beijing Dmall E-commerce Co., both of which have recently sought to raise funds, Bloomberg News has reported.
Deep-pocketed e-commerce giants including Pinduoduo Inc. and Meituan unveiled their own location-based community group buying platforms last year, potentially fueling a costly battle in a fragmented grocery delivery market.
Read More: Alibaba, Meituan Chase $14 Billion Group-Buyers Arena
©2021 Bloomberg L.P.
With assistance from Bloomberg
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