Despite the world’s markets being crippled by the coronavirus, Pinduoduo Inc., the Chinese eCommerce company, said on Tuesday (March 31) that it has raised $1.1 billion from newly issued Class A shares in a private placement.
The transaction, which is expected to close in April, represents about 2.8 percent of the Shanghai-based technology company’s total outstanding shares. Pinduoduo said the firm will use the money to finance growth, upgrade its shopping experience for users and offer more products.
Pinduoduo calls itself a “fast-growing technology firm that provides buyers with value-for-money merchandise and a fun and interactive shopping experience.” The company claims that its “mobile platform offers a comprehensive selection of attractively priced merchandise, featuring a dynamic social shopping experience that leverages social networks effectively,” according to the statement.
Earlier this month, Pinduoduo reported that the technology platform had total revenues of $1.5 million in the fourth quarter in 2019, a 91 percent increase from the same period in 2018, primarily due to higher revenues from online marketing services. Last year, revenues totaled $4.3 million, up 130 percent from 2018.
“Since the coronavirus outbreak, we have directed the resources of our ecosystem to support frontline relief efforts, stabilize prices of necessities, and help with the recovery of our merchants and business partners,” said Zheng Huang, chairman and CEO of Pinduoduo, at the time.
Last fall, Reuters reported that Amazon is opening a store on the Pinduoduo site. Amazon closed its marketplace in China in July after realizing it could not compete with rivals such as Alibaba’s Tmall and JD.com, which controlled nearly 82 percent of the country’s market last year.
The deal granted Amazon access to Pinduoduo’s 429.6 million monthly active users. Pinduoduo, in turn, gets the opportunity to build a relationship with overseas retailers and branch out into more product categories.
Amazon China held less than 1 percent of China’s total eCommerce market as of June 2018, according to market research institute eMarketer (in Chinese).