Worst May Be to Come for Meituan Shares as IPO Lock-Up to Expire
Worst May Be to Come for Meituan Shares as IPO Lock-Up to Expire
(Bloomberg) -- The worst may be to come for Meituan Dianping, as key investors who could only watch the stock shed more than $13 billion in market value since it listed will be able to join in the selling next week.
A six-month lockup period during which employees and cornerstone investors are banned from disposing of their shares is set to expire next week. Meituan has dropped 24 percent since listing in September, and its stock was dumped on Tuesday after the food delivery company reported widening losses for the December quarter.
Up to 2.6 billion of public float shares held by pre-IPO and cornerstone investors are set to be unlocked next week, according to its prospectus. The company’s employees were granted 512 million shares when the company listed, and lock up periods for those will also expire next week. Shareholdings of Tencent Holdings Ltd. and those held by funds of Sequoia Capital are not counted toward the public float.
Some shareholders who have owned a piece of the company since its first funding rounds can pocket a significant profit by selling the unlocked shares. Shares bought in a round of funding that started in 2010 cost less than 40 Hong Kong cents each, according to the company’s prospectus. The shares closed at HK$52.35 on Tuesday.
--With assistance from Fox Hu.
To contact the reporter on this story: Jeanny Yu in Hong Kong at jyu107@bloomberg.net
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, David Watkins, Kana Nishizawa
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