Exclusive: Alibaba Hema Xiansheng slashes funding at $6 billion valuation


 Customers wearing face masks shop at Alibaba's Hema Xiansheng chain after the coronavirus outbreak, during the Lunar New Year holiday in Beijing, China, January 27, 2020. Reuters/Wang Tingshu.


HONG KONG, July 12 (Reuters) - Alibaba’s (9988.HK) supermarket chain Hema is trying to raise funds worth about $6 billion, well below the as much as $100 it hoped to raise earlier this year, three people familiar with the matter said. billion dollars in funding. The matter told Reuters.


They said the company had to lower its valuation expectations after China's COVID-19 restrictions, particularly the severe lockdown in Shanghai, the economic hub, severely affected business.


Given the company's bleak outlook, investors are also skeptical that loss-making Hema can continue to grow and turn a profit soon as the world's second-largest economy continues to implement strict policies to eradicate COVID-19 cases, two of the people said. .


The supermarket chain, known in China as Hema Xiansheng, is aiming to raise between $40 billion and $500 million from outside investors, two sources said.


The fundraiser is far from complete and financial terms could change, two people familiar with the matter and another person familiar with the matter warned. All sources declined to be named because the information is confidential.


The fourth source said Hema would welcome good investors to help it grow, but added that it had healthy cash flow and was not under immediate pressure to raise new capital.


Alibaba and Hema did not respond to Reuters' requests for comment.


Hema has tempered its ambitions for its first-ever independent private funding round at a time when global investor interest in unprofitable tech companies has waned.


Highlighting falling global valuations, Swedish payments firm Klarna Bank AB said on Monday it had raised $800 million worth $6.7 billion, down about 85 percent from last year's $46 billion.


Private fundraising in China has also slowed since last year as regulators cracked down on tech, coaching, gaming and other industries across the board.


Despite signs that Chinese regulators may ease regulations, traders do not expect an immediate increase in investment in the country given the bleak economic outlook.


Hema was founded in 2015 and is 100% owned by e-commerce giant Alibaba. According to its website, Hema has more than 300 stores in 27 cities offering grocery delivery.


Shanghai is the largest market with 73 stores. While Shanghai residents have relied heavily on delivery services during this year's two-month lockdown, grocers like Hema have struggled to meet demand due to COVID-19 restrictions and disruptions to the country's supply chain.


💌 Source and recommendation: reuters.com 🔊 EXCLUSIVE: Alibaba's Hema Xiansheng seeks financing at a slashed $6 billion valuation.


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