A Chinese startup is landing hundreds of millions in additional financing as a group of investors – which includes Tencent – eyes the country’s fast-growing grocery delivery sector.
Tencent and private equity heavyweight Primavera are spearheading the $300 million investment in Xingsheng Youxuan, Bloomberg reported, citing sources familiar with the deal, which values the company at a healthy $3 billion.
The startup, based in Hunan, has enjoyed a significant boost from the COVID-19 epidemic, which has forced Chinese consumers to seek out food delivery services and other alternatives.
Xingsheng Youxuan recently filed paperwork to go public in 2020, investment research firm EqualOcean reported.
Daily orders have crossed the four-million mark for Xingsheng Youxuan, with convenience stores supplying fresh goods and household products for order and delivery through its eCommerce platform.
The company landed its first round of funding in the fall of 2018, when Jinshajiang Venture Capital, CapitalToday’s Xu Xin and ZhenFund helped the venture get off the ground with tens of millions in angel round funding.
Last fall, Primavera stepped forward, leading a $200 million investment group that also included Tencent, as well as the Zhen Fund, KKR and Eastern Bell Capital, according to a blog post by the law firm of Weil, Gotshal & Manges LLP, which represented Primavera.
The latest round of funding for Xingsheng comes as its rival, Hong Kong-based Meituan, has seen its value skyrocket, with the publicly-traded firm crossing the $100 billion valuation mark in late May. That has put Meituan in rarified company, with Tencent and Alibaba being the only other Chinese companies to cross the $100 billion threshold.
Tencent’s decision to take part in the latest, $300 million round of financing is part of a major investment push that has seen it back more than 800 Chinese firms. Earlier this year, Tencent announced that it would be expanding its investment focus to international firms and “smart retail” as well.