China's Meituan-Dianping aims to raise up to $5 billion from Tencent, others -source

By Julie Zhu

HONG KONG (Reuters) - Online Chinese services firm Meituan-Dianping, backed by Tencent Holdings , is in talks with prospective investors to raise up to $5 billion, likely valuing the startup at as much as $30 billion, said a person with direct knowledge of the matter.

China's largest on-demand services provider, which is akin to a mix of Yelp and Groupon and does food delivery, is in talks with several global institutional investors to raise $3 billion to $5 billion and obtain a valuation of $25 billion to $30 billion, the person said.

About $1 billion of the new funds would come from an additional investment from Tencent, said the person, who declined to be identified as the talks were not public.

Meituan-Dianping and Tencent declined to comment.

Bloomberg reported earlier on Thursday that Meituan-Dianping is in talks to raise up to $5 billion.

The latest fundraising plan comes as the startup looks to invest heavily in offline retail services in a strategy that will pit it directly against China's top e-commerce firms.

Alibaba Group Holding and JD.com Inc are already channeling substantial resources into big data, artificial intelligence and logistics to tap new consumers in China's vast offline retail market - brick-and-mortar stores that still make up over 80 percent of total retail sales in the country.

Alibaba invested in Meituan prior to the latter's 2015 merger with Tencent-backed Dianping, but its stake fell after the deal. It has since invested heavily in a separate group of on-demand service providers, including food delivery platforms Ele.me and Koubei and ticketing service Tao Piao Piao.

Meituan-Dianping said in January last year that it had raised over $3.3 billion in funding, led by Tencent and Singapore's Temasek Holdings, that valued it at more than $18 billion, in one of the biggest fundraising rounds by a startup.

It has more than $3 billion remaining from that funding round and has no plans for an initial public offering before completing setting up infrastructure for services including offline retail, Chen Shaohui, its VP of strategy, told Reuters in an interview last week. [nL3N1KH3K8]

Meituan-Dianping, which has 200 million monthly active users, opened its first offline concept store last month, where consumers can go and buy grocery items and seafood using the company's app.

It also looks to expand its base of strategic partners and invest in backend technology, small-scale ride-hailing services as well as in the travel ticketing business, Chen said.

(Reporting by Julie Zhu; Addintional reporting by Kane Wu, Elzio Barreto and Sijia Jiang; Editing by Christopher Cushing and Muralikumar Anantharaman)