Sina Tech, 10/25/11
According to Groupon's IPO prospectus, E-Commerce King Limited, operator of Chinese group buy site Gaopeng.com, reported USD 2.14 mln in revenue and USD 46.45 mln in net loss from operations for the first nine months of 2011. Gross billings for the period reached USD 18.44 mln.
Groupon holds a 49% stake in E-Commerce King, while Tencent (0700.HK) subsidiary TCH Burgundy Limited holds a 40% stake and Yunfeng Fund and Rocket Asia hold 10% and 1%, respectively. Groupon acquired a 40% stake in January 2011 for USD 4 mln followed by an additional 9% stake (2.91 mln shares) purchased from Rocket Asia for USD 4.52 mln in July 2011.
Gaopeng's total current assets as of September 30, 2011 were USD 10.91 mln, along with USD 6.39 mln in noncurrent (fixed) assets and USD 15.42 mln in current liabilities.
Groupon also disclosed that it invested an additional USD 14.9 mln in Gaopeng during the first nine months of 2011, and at the same time, the remaining investors made additional proportionate investments that resulted in no change to Groupon's ownership percentage in the joint venture and totaled USD 37.25 mln in additional funding.
Given that Groupon purchased a 40% stake for USD 4 mln, total initial investment from all four investors equaled USD 10 mln. Combined with the amount of subsequent funding, and as of the end of September, Gaopeng had received in aggregate USD 47.25 mln in funds.
Editor's Note: Groupon's IPO prospectus also includes the full text of an e-mail sent to Groupon employees by CEO Andrew Mason on August 25, 2011, in which Mason states: "What about our joint-venture with Tencent in China? Did you read the article that Gaopeng's CEO has kidnapped the first born children of all our employees and is putting them to work building a laser beam he'll use to slice the moon in half? It turns out that that one isn't true either. China is definitely a different market, but every month we inch closer to profitability. As has been our strategy in launching in other countries—Germany, France, and the UK, included—our China growth strategy was to hire quickly and manage out the bottom performers. So far, that strategy has improved our competitive position in China from #3,000 to #8. Will we one day reach the dominant status we enjoy in most (come on, Switzerland!) other countries? It's too soon to tell, but there's no question in my mind that we're building a business that will be around for the long haul." To view Groupon's full IPO prospectus, please click here.