Alibaba’s Freshippo is seeking funds at a deeply discounted $6 billion valuation, sources say

Alibaba’s supermarket chain Freshippo is seeking to raise funds at a valuation of around $6 billion (5.99 billion euros), well below an expected valuation of up to $10 billion earlier this year, said three people familiar with the matter. Reuters.

The company had to lower its valuation expectations after China’s COVID-19 restrictions, particularly a draconian lockdown of economic hub Shanghai, which severely hurt business, they said.

Investors are also skeptical whether loss-making Freshippo can continue to grow and turn a profit anytime soon given the company’s bleak outlook as the world’s second-largest economy continues to pursue a strict case-shedding policy. of COVID-19, two of the people said. .

The supermarket chain, known as Hema in Chinese, is aiming to raise $400-500 million from outside investors, two of the sources said.

The fundraiser is far from complete and financial terms could change, warned two of the people and a fourth separate source with knowledge of the matter. All sources declined to be identified as the information was confidential.

Good investors

The fourth source said Freshippo would welcome good investors to help it grow, but added that it had a healthy cash flow and was under no immediate pressure to raise new funds.

Alibaba and Freshippo did not respond to Reuters requests for comments.

Freshippo’s reduced ambitions for its first independent private fundraising come amid declining investor interest around the world in tech companies that have yet to turn a profit.

Highlighting plummeting valuations globally, Swedish payments firm Klarna Bank AB said on Monday it had raised $800 million in funds at a valuation of $6.7 billion, down about 85 % from the $46 billion valuation it attracted last year.

Private fundraising in China has also slowed since last year due to a sweeping regulatory crackdown on the tech, tutoring, gaming and other sectors.

Despite signs that Chinese regulators may ease regulatory crackdowns, dealmakers don’t expect to see an immediate increase in investment in the country given the gloomy economic outlook.

Founded in 2015 and wholly owned by e-commerce giant Alibaba, Freshippo has 300 stores in 27 cities that offer grocery delivery services, according to its website.

Shanghai is its largest market with 73 stores. Although Shanghai residents have relied heavily on delivery services during the city’s two-month lockdown this year, grocers like Freshippo have struggled to keep up with demand due to COVID-19 restrictions and disruptions to the country’s supply chain.

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