Tencent to Buy 20% Stake in China’s Largest Restaurant Review Site Dianping for $20M to cultivate China’s online-to-offline (O2O) market

Tencent to Buy China’s Largest Restaurant Review Site: Reports

02-17 11:25 Caijing

The deal which will reportedly cost $4million signals the Internet giant’s ambition to cultivate China’s online-to-offline (O2O) market.

China’s leading Internet company Tencent Holdings Ltd. is planning to buy a 20-percent stake in Dianping, a Yelp-like Chinese restaurant review site, Chinese media reported.

The deal which will reportedly cost $4million signals the Internet giant’s ambition to cultivate China’s online-to-offline (O2O) market.

Tencent has the option to take another 5 percent stake within a year after Dianping is listed overseas, Bloomberg Business Week Chinese reported, quoting Tencent sources.

Zhang Tao, founder and CEO of dianping.com said last year that dianping.com would launch an IPO in five years.

Founded in 2003 by Zhang, the Shanghai-based Dianping now has more than 90 million monthly active users. Apart from food reviews, the site serves as a third-party platform for users to share views on shopping, entertainment and exercise in about 40 mainland cities, as well as providing O2O services including group-buying and restaurant booking.

The site has so far attracted investments totaling about US$165 million worth of venture capital, including a US$4 million investment from Google China in 2007.

Dianping was valued at about US$100 million in 2007, compared to a current estimate exceeding US$2 billion.

Both Tencent and Dianping refused to comment on the reports.

Tencent shares hiked to a new high of HK$567.5 in the morning trading session on Monday.

 

Tencent Has Taken A Stake in Dianping, China’s Yelp

By Tracey Xiang on February 16, 2014

The rumor that Tencent and Dianping were in talks about acquisition or investment has swirled for a while. TechNode learned from multiple sources that Tencent has already acquired a stake in Dianping and will announce it as soon as early this week.

It is rumored that Tencent has bought 20%-25% a stake at a valuation of USD1.8 – 2 billion. Around last October it was rumored that Baidu wanted to to buy the whole Dianping for about USD2 billion. In 2011 the company was valued at about USD1 billion in a over USD100 million round of funding. Since 2005, Dianping has received multiple rounds of funding from investors including Sequoia Capital China and Google China.

Edward Long (aka Long Wei), co-founder of Dianping, said they’d not sell the whole company and had no plan for IPO in the near future when asked about the acquisition rumor at our TechNode/TechCrunch conference last November. Zhang Tao, co-founder and CEO, said in last year that the company might launch IPO within five years.

Founded in April 2003, Dianping is in its eleventh year. It is now the most popular ratings & reviews service in China. As of the fourth quarter 2013, monthly active users were 90 million, with 75% page views from mobile. There are 8 million merchants and 30 million ratings/reviews on the platform. It covers 2300 cities in China and a dozen of countries.

Although it doesn’t have a major competitor in ratings & reviews, Dianping’s rivals are in group-buying and other lifestyle/local sectors. Since group-buying has become one of Dianping’s major revenue sources, Meituan and a couple of other group-buying services are direct competitors. Dianping claimed it became No.1 in terms of market share in the first- and second- tier cities as of the end of 2013. Meituan, however, claimed it had had 50% overall market share in late 2013 and managed to turn a profit at the year end.

Dianping also makes revenues from advertising and other services for business.

Not having been growing as fast as some other Chinese businesses like group-buying services, Dianping has big plans for acceleration this year. Previously Dianping only provided information, but now it has launched food delivery service and is building a hotel booking service. It also has spun off the business division for wedding-related information and will possibly come up with services.

It is expected Tencent will integrate Dianping’s content or services into its properties especially WeChat, the almighty mobile messaging app whose Official Account system enables traditional merchants to do CRM or even sell goods directly there. Tencent, who is notorious for developing/copying all kinds of web/mobile services, has its own ratings & reviews, group-buying, lifestyle/local services. But none of them is as successful as Tencent’s communication software and gaming.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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