Pinduoduo Subscribes to USD 200 Mln in Gome Convertible Bonds in Strategic Partnership
Pinduoduo, 4/19/20
Chinese e-commerce platform operator Pinduoduo (Nasdaq: PDD) today announced it will subscribe to USD 200 mln in convertible bonds ("CBs") issued by Chinese household appliance and electronics retailer GOME Retail Holdings Limited (0493.HK) as part of a strategic partnership to bring more value-for-money merchandise to Pinduoduo's 585.2 mln users.
The CBs will have a coupon rate of 5% per annum and a tenure of three years, with an option to extend by two years at the election of Pinduoduo, according to a statement by GOME. The CBs are convertible at HKD 1.215 per share, which works out to approximately 1.28 bln GOME shares or approximately 5.6% on a fully diluted basis.
"This strategic partnership is a win-win-win," said Mr. David Liu, Vice President of Strategy at Pinduoduo. "Consumers win because they get a wider range of top domestic and international brands at competitive prices, GOME wins because they can broaden their access to our 585.2 mln users, and Pinduoduo wins because we enhance our foothold in household appliances and electronics."
The tie-up marks the first strategic investment by Pinduoduo and comes after its USD 1.1 bln share placement to long-term investors in March, when the company said it will use the proceeds to enhance user experience. The partnership also strengthens the e-commerce platform's position in household appliances and electronics while accelerating its push into consumer-led manufacturing.
As part of the partnership, Pinduoduo will help bring the entire GOME product range, including top domestic and international brands such as Siemens, Sony, Haier, Gree and Midea, onto the Pinduoduo platform at competitive prices.
Pinduoduo will also help GOME's digitization strategy, extending Pinduoduo's technological capability to help the retailer upgrade its supply chain and tailor its product range to consumer needs and preferences. GOME will integrate its logistics, delivery and assembly services with the Pinduoduo platform to enhance user satisfaction.
With GOME's extensive network of stores across China, Pinduoduo users will be able to enjoy an extension of their user experience to try and experience the products before placing their orders.
The deal also furthers Pinduoduo's push into the consumer-to-manufacturer (C2M) realm by working with GOME to source for products that are tailored to customers' needs.
Pinduoduo has been a pioneer and champion of the C2M model, where consumer demand and preferences are aggregated through e-commerce to help manufacturers customize their product design prior to the manufacturing stage to suit different demographics and customer segments.
Founded in 2015, the Shanghai-based company has seen rapid growth as it builds on its strength in all product categories, including household appliances and electronics.
Pinduoduo exceeded RMB 1 trln (USD 144.6 bln) in GMV for the 12-month period ended December 31, 2019. The company saw a 40% increase in active buyers in the same period to 585.2 mln, while annual spending per active buyer jumped 53%.
Keywords: consumer electronics e-commerce m-commerce Internet funding investment retail statistics debt financing Gome home appliances M&A 0493.HK logistics group buying David Liu GMV Pinduoduo Gome Retail Holdings PDD C2M
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