Chinese e-commerce firm Pinduoduo said on Tuesday it had raised $1.1 billion in a private share placement that will enable its further expansion and allow it to capture “additional opportunities” during the times of uncertainty.
The Nasdaq-listed firm said some of its long-term investors financed the deal. The investors were granted newly issued Class A ordinary shares of Pinduoduo representing approximately 2.8% of the company’s total outstanding shares.
The capital raise comes weeks after the Shanghai-based company said it was bracing for losses due to the coronavirus outbreak. The firm’s fourth-quarter revenue growth fell short of expectations.
Pinduoduo, which competes with giant Alibaba, has grown rapidly in recent years after gamifying the shopping experience that allows customers to team up to buy anything from smartphones to fruits.
But the firm’s marketing — promotions and discount coupons — has also widened its losses. In Q4 2019, Pinduoduo reported a loss of about $250 million on revenue of $1.5 billion.
“Pinduoduo surpassed 1 trillion yuan in annual gross merchandise value (GMV) in less than five years, and we are confident that we will see robust growth beyond our current 585 million user base,” said David Liu, VP of Strategy at Pinduoduo, said in a statement.
“The extra funding gives us the strategic flexibility to capture opportunities to further benefit our users, as we bring interactive experiences, such as our new live-streaming features, and wider variety of value-for-money products to them,” he added.
As with e-commerce firms in other parts of the world, Pinduoduo in recent months has focused on fulfilling low-cost protective gear and everyday essentials over everything else.