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Sequoia Capital China slashes Meituan holding amid regulatory woes

11/01/2021| 2:04:03 PM|

Investors are concerned that tightening regulations will inexorably increase the cost of employing gig workers.

Sequoia Capital China, a longtime backer of Meituan, dumped billions of dollars of shares in the food delivery giant and slashed its holdings by nearly 60% over three years as the company endured probes, fines and public scorn over anti-competitive practices and mistreatment of labor.

Sequoia China and its billionaire founder Neil Shen Nanpeng reduced their combined stake in Meituan from a peak of 12.05% in September 2018, when Meituan went public in Hong Kong, to the current 5.29% in 24 transactions, public market records showed. This year alone, the stock lost almost 40% over four months before rebounding.

Investors are concerned that tightening regulations will inexorably increase the cost of employing gig workers like takeout riders and ride-hailing drivers, according to industry insiders. In July, Chinese regulators issued guidelines targeting food delivery platforms and pushing employers to guarantee incomes above the minimum wage as well as social security and insurance coverage for workers.

In 2021 alone, Shen and Sequoia China slashed their Meituan exposure in 10 transactions, including six public share sales and four private placements to limited partners. The transactions totaled about HK$30 billion ($3.9 billion).

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TAGS: Sequoia Capital China | Meituan
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