China’s 360buy is on a fundraising tear. The company, which is one of China’s leading online business-to-consumer retailers, just closed a $700-million round of equity financing that included investment from Saudi billionaire Prince Alwaleed bin Talal. (You may recognize Prince Alwaleed from his investment in Twitter, News Corporation, and various other tech and media companies and hotel chains.) Just last November, 360buy raised around $400 million. And nearly two years ago it drummed up a whopping $1.5 billion. Its investor roster is similarly impressive: it includes the Ontario Teachers Pension Plan, the Tiger Fund, Sequoia Capital, Wal-Mart and Russia’s Digital Sky Technologies.
Except that unlike its main competitor, Alibaba Group—which owns T-mall, a rival business-to-consumer site, as well as Taobao, China’s answer to eBay—360buy is still burning through cash. In 2011, it sustained 1.3 billion yuan ($200 million) in losses.
The company says things are turning up. It s sales volume last year reportedly topped 60 billion yuan, more than twice what it brought in in 2011. And CEO Richard Liu assures that profitability lolls on yon Q4 horizon.
That might seem fine—until compared with this stat: Last November, Alibaba’s T-mall sold $2.1 billion in goods in one single 24-hour period, nearly a quarter of 360buy’s whole year of sales. (Granted, it was China’s Valentine’s Day, of sorts. But still.)
This hints at the reason for 360buy’s furious fundraising: it must beat Alibaba to the bourse if it hopes to command a premium valuation. ”360buy has to IPO within the next 6-12 months. It is a momentum issue and that’s to say they have to try to get out before Taobao IPOs and sucks all the oxygen out of the room,” said Michael Clendenin, managing director of RedTech Advisors, told Reuters. The tight timeline he cites is because Alibaba is rumored to be planning a public listing for late 2013 or early 2014.
If that speculation holds, it wouldn’t be the first time 360buy has mulled an IPO. In September of 2011, the company was said to be planning a Nasdaq listing, and rumors picked up once again in March of last year.
It’s not clear why Liu passed on those chances. But one reason that it declined to list in 2012 (link in Chinese), says tech blog Huxiu, might be its falling valuation. When the company raised $400 million last November, it was valued at between $6 billion and $7.25 billion. That’s a big slide from the $10-billion valuation it earned in April 2011, when it raised $1.5 billion in Series C funding. Meanwhile, Caixin reported last year that its failure to turn a profit in 2011 disappointed investors, and that investment bank analysts whom Liu hired to investigate an IPO valued it at a mere $5 billion.
Of course, it remains to be seen whether 360buy’s somewhat scattershot plans—among other things, it will be investing in its logistics and warehousing system, digital services and an overseas site—will justify Liu’s hoped-for premium. But with industry darling Alibaba already on the starting blocks, 360buy will have to take whatever IPO valuation it can get.
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