Meicai Reportedly Revives Hong Kong IPO Plan After Backing From Hillhouse, Meituan and Others

This is an English adaptation of a FoodBud historical article originally published on November 17, 2021.

Bloomberg, citing people familiar with the matter, reported that Chinese foodservice supply-chain platform Meicai had selected CICC, Citigroup and Nomura to work on a Hong Kong IPO. The proposed listing was said to target fundraising of USD 300 million to USD 500 million, though the timing and size were still under review and could change.

Meicai was founded on June 6, 2014. Operated by Beijing Yunshan Information Technology Co., Ltd., it was built by the former founding team of group-buying platform Wowo and positioned as a mobile e-commerce company for agricultural products, vegetables and fruit.

By September 2018, Meicai was valued at nearly USD 7 billion. Over the previous five years, the company had maintained rapid growth.

A B2B Fresh-Food Supply Model

Unlike consumer-facing fresh grocery platforms such as Missfresh and Dingdong Maicai, Meicai focused mainly on B2B agricultural supply. Its downstream customers were primarily restaurants and vegetable retailers.

The company previously disclosed that by the end of 2020 it served more than 2 million restaurants across over 300 Chinese cities.

According to Qichacha, after Meicai completed a USD 600 million financing round in October 2018 from investors including Hillhouse Capital, there had been no further reported financing news for three years.

Layoff and Cash-Pressure Reports

Before the IPO report, Meicai had been linked to large-scale layoffs, city withdrawals and funding difficulties.

According to media reports, in September 2021 Meicai was conducting major layoffs. CTO Liao Ruoxue had reportedly been dismissed, and after co-founder Xu Xueyin took over the technology department, nearly 50% of its staff were cut.

A former Meicai employee surnamed Wang said Meicai’s profit model had not worked, financing had stalled, and cash-flow pressure made layoffs inevitable. He also said the company would reduce its previously aggressive warehousing buildout and withdraw from some cities.

Meicai publicly responded that normal organizational adjustments and optimization had taken place in the past, were taking place at the time, and would continue in the future, with the aim of improving efficiency and professional capability to provide better service and value to customers. The company also said all of its business cities were operating normally.

Some Meicai employees, however, said layoffs had already affected R&D, procurement, finance and other departments, creating issues in supplier coordination and affecting daily operations.

Sector Pressure Beyond Meicai

Meicai was not the only company facing pressure in China’s restaurant supply-chain market.

In September 2021, Meituan’s Kuailv business was also reported to be making a large strategic contraction. Kuailv served nearly 100 cities and was expected to pause operations in some of them, retaining mainly first- and second-tier cities.

In the first quarter of 2021, Kuailv had proposed a “100-city campaign,” aiming to expand through a lighter platform model rather than a fully self-operated approach. It later entered about 70 cities, mainly third-tier markets. A Kuailv source said that in the second half of the year the business would focus more on existing partner sellers and strengthen platform capabilities in supply, warehousing and fulfillment.

The Operator Question

FoodBud’s view at the time was that Meicai faced significant funding pressure. Repeated listing rumors reflected a core issue: the company’s own cash-generation ability was not yet strong enough.

Available materials indicated that Meicai’s gross margin was only around 10%, and that its self-operated business had lower gross margins than its platform business. To become a China-market equivalent of Sysco, Meicai would need not only to survive, but also to secure continued large-scale capital injections and build a defensible moat.

That created a difficult position: with a high valuation and primary-market investors hesitant to keep investing, would a move to public markets really be a better option?

Note: IPO, fundraising, valuation and forward-looking figures are historical references from the article’s 2021 context.