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Thursday, December 2, 2021

China’s top venture capitalists reduce stakes in Meituan and Pinduoduo

As Beijing’s review of the industry has led to the introduction of comprehensive new regulations, the top Chinese venture capitalist has increased the sale of his three largest investments, which are now among China’s largest technology companies.

Shen Nanpeng, the head of Sequoia Capital China, sold up to $215 million in stocks in fast-growing group-buying app Pinduoduo, food delivery giant Meituan, and food delivery platform Dada Nexus.

His investment in New York-listed Pinduoduo and Hong Kong-listed Meituan helped him to top the Forbes Midas rankings for several consecutive years and become the most successful venture capitalist in Asia. The 53-year-old’s personal net worth is estimated at 4.4 billion U.S. dollars.

“In China’s investment community, there are Shen Nanpeng and others,” said an admirer in the industry. “He is the only one who has become a banker, entrepreneur and investor, which gives him an advantage.”

Shen’s biggest stock sale was Meituan, which was fined $530 million last month for violating antitrust laws.

On October 25, he sold about US$100 million in Meituan stock that he held in his own name through a family investment vehicle. Since then, he sold $55 million in stocks in September, which was his largest personal stock sale at the time and his second sale. According to documents filed in Hong Kong, since the company’s initial public offering.

Meituan driver delivers food in Beijing
Meituan drivers deliver food in Beijing. Neil Shen’s largest inventory sales come from the Food Delivery Group © Greg Baker/AFP/Getty

Since the establishment of the Sequoia China branch more than ten years ago, Shen has built this venture capital company into one of China’s most outstanding investors. According to CB Insights, the group completed 96 transactions in the third quarter, making it the most active fund in the world.

Although other international funds are suspended in an uncertain regulatory environment, the investment boom of Sequoia Capital China is coming. In recent days, officials have begun to dismantle the education technology industry, which has absorbed billions of dollars, and stopped the conveyor belt for Chinese companies to go public in New York.

Chinese President Xi Jinping launched a wealth redistribution campaign in August, prompting Chinese technology giants to donate more and more profits to charity.

In September, Shen began to cash in some of his most valuable stocks, such as those of Meituan and Pinduoduo. This seemed to be the first time he disclosed personal sales of the company’s stock. Since 2017, Sequoia has injected USD 370 million into Pinduoduo in three rounds of private financing, paying an average of USD 1.22 per share.

According to Form 144 filed in the United States, when Shen and his family’s investment vehicle began selling 280,000 shares worth nearly US$30 million on September 8, Pinduoduo’s stock price was US$107 per share. The e-commerce group’s share price fell from its peak of $212 in February.

Shen is a board member of Pinduoduo and may continue to hold shares in the company. He did not respond to a request for comment on the sale of his stock.

According to Form 144 data analyzed by Bradford Lynch, three senior executives of Pinduoduo, including Chairman and CEO Chen Lei, also sold shares in September. In the company’s first disclosure of stock sales since its listing in 2018, each person Both cashed in stocks worth approximately $7 million-Levy of the Wharton Forensic Analysis Laboratory.

“The 144 table data provides the only record of Chinese executive stock sales because the SEC’s disclosure rules for foreign issuers are outdated, allowing executives of foreign companies to effectively conceal their transactions from investors,” Lynch- Levi said.

Pinduoduo did not respond to requests for comment on sales.

In September, Shen also sold up to US$30 million in shares in Dada Nexus, a distribution platform that connects the company with courier companies and delivers their goods to shoppers.

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