Photo/Shetuwang

July 26 (NBD) -- Pinduoduo prices its U.S. IPO at 19 U.S. dollars per American depositary receipt (ADR), the news portal All Weather TMT reported Thursday citing sources at the Chinese bulk-buying platform.

ADRs are stocks that are traded in the U.S. but represent a specified number of shares in a foreign corporation, such as Alibaba.

Shortly before the issue price being finalized, Pinduoduo was reported to hike its IPO price by 20 percent to 22.8 U.S. dollars per ADR due to oversubscription.

Earlier on Thursday, the financial newspaper Caixin quoted market participants familiar with Pinduoduo IPO as saying IPO of the group-buying site is oversubscribed by 20-fold from investors including Fidelity Investments and the sovereign funds of Abu Dhabi.

The source also told Caixin although the oversubscription would allow Pinduoduo to raise its IPO price, yet the company's founder Huang Zheng pinned the price at 19 U.S. dollars per ADR. The issue price is likely to set Pinduoduo's valuation above 24 billion U.S. dollars.

Tencent and Sequoia Capital plan to up stake in Pinduoduo for 250 million U.S. dollars, respectively, via the IPO. After the IPO, Huang Zheng, founder and CEO, will hold a 46.8 percent stake in the company, with 89.8 percent of voting rights, and Tencent will hold a 17 percent stake with 3.3 percent of voting rights.

Despite being a latecomer in the e-commerce sector, Pinduoduo ranks third domestically in terms of user activity and GMV (Gross Merchandise Volume), following Alibaba and JD.com.

According to the prospectus, during a 12-month period ending on June 30 of 2018, Pinduoduo garnered 262.1 billion yuan (38.7 billion U.S. dollars) in GMV and attracted 344 million active users.

However, management issues are being exposed under the spotlight along the fast-expansion path of Pinduoduo.

A week prior to its IPO, Pinduoduo was sued by U.S. diaper maker Daddy's Choice for selling fake products, New York Times reported. The bulk-buying site has been caught in a string of fake goods disputes due to its loose verification mechanism for vendors, according to media reports.

Professional investment bankers held that news like counterfeits sales will possibly influence Pinduoduo's share price in the short term, but will not compromise its market approbation in the long run. But the bankers acknowledged that entering into a new arena, Pinduoduo should bear more responsibilities.

Email: gaohan@nbd.com.cn