China's Largest Online Alcohol Retailer Jiuxian.com Secures Additional 500 Million Yuan in Financing

Aug 06, 2015, 03:35 ET from Jiuxian.com

BEIJING, Aug. 6, 2015 /PRNewswire/ -- Jiuxian.com chairman Hao Hongfeng announced that the online alcohol retailer has secured an additional 500 million yuan in its 7th round of financing, following the 930 million yuan secured during the first 6 rounds. The funds raised will be used to further expand the company's market share in the B2C field, and accelerate the development of its online-to-offline (O2O) business, jiukuaidao.com, and its line of customized brands for online sales channels.

Hao also said the company is expected to submit an application for a listing on China's new over-the-counter (OTC) equities market within the next month. Jiuxian.com decided to be listed on the new OTC "mainly for the potential of uplisting to the Hong Kong GEM board or to the Strategic Emerging Industries Board (the new alternative stock exchange being built by the Shanghai Stock Exchange)," Hao explained.

Jiuxian.com's valuation increases to 6.5 billion yuan after 7 rounds of financing

Jiuxian.com once again received financial support, following 300 million yuan in investment from China Development Bank Capital and other co-financers in August 2014. "The 500 million yuan investment came from Merrysunny Wealth as well as several other institutional and individual investors," Hao said. "It is not only the largest ever investment secured by Jiuxian.com, but also the largest in the entire alcohol e-commerce sector, increasing the valuation of the website to 6.5 billion yuan."

To date, Jiuxian.com has completed 7 rounds of equity financing, raising a total of 1.43 billion yuan. Investors in the first 6 rounds included leading PE/VC firms Sequoia Capital, Shenzhen Oriental Fortune Capital, China Renaissance and China Development Bank Capital. The 500 million yuan in the 7th round was led by Merrysunny Wealth.

The valuation of Jiuxian.com stood at 380 million yuan in 2012, and grew to more than 2 billion yuan after the 4th financing round in 2013. The current valuation at 6.5 billion yuan is "considered very high in the alcohol e-commerce sector, but is still low among all Internet firms. But generally speaking," Hao added, "it is a relatively fair price."

Bullish on B2B and O2O markets

Following 6 years of development, Jiuxian.com has built out 5 business segments: online alcohol retail -- Jiuxian.com (B2C); integrated branding services; real-time services -- jiukuaidao.com (O2O); creation of customized brands for online sales channels; and online special offers -- zhongniang.com (B2B). B2C is the core business.

Hao said Jiuxian.com, for the sake of long-term development, began entering the O2O and B2C areas last year, and tested out products customized specifically for online sales. The company has achieved significant progress in the new areas. Last year, Jiuxian.com recorded sales in the billions of yuan, by integrating several retail channels in a move to improve the overall efficiency of the distribution network. However, it will take some time for the new businesses to develop their own customer bases, as the businesses are still in their infancy. The new business still need a considerable amount of funding and resources at present, and, as a result, are not yet profitable. "Looking down the road for the alcohol industry, there is huge space for growth for both the B2B and O2O segments," Hao added.

As for the creation of customized brands for the online sales channels, Jiuxian.com and Luzhou Laojiao last year jointly launched the first alcohol brand, SANRENXUAN, which recorded sales of 150 million yuan in the first 9 months post launch.

Jiuxian.com has continuously gained recognition from the capital markets, with its promising capabilities at running its operations and its business model. The inflow of capital and the potential listing on China's new OTC market will serve to further boost the development of the company.

SOURCE Jiuxian.com