Tiger World-backed grocery supply start-up Missfresh is preventing to outlive because it shuts operations throughout China, wallows in an accounting scandal and searches for capital to maintain its enterprise.

Shares of the Nasdaq-listed firm have misplaced 97 per cent of their worth since its IPO in June final 12 months, and this week introduced it will dilute ailing shareholders additional by issuing 300mn shares to a Shanxi coal mining group for Rmb200mn ($30mn).

The sale will hand Shanxi Donghui Group a roughly 30 per cent stake in Missfresh and it is going to be capable of appoint two administrators as a part of the transaction.

One individual near the corporate mentioned that in latest months, it had held talks with a variety of suitors together with GOME Electrical Home equipment, SF Specific and China Assets as administration looked for financing or an acquirer.

The upheaval marks a stark flip of fortunes for Missfresh, which pulled in additional than $1bn in financing from buyers equivalent to Tiger World and Goldman Sachs and gained a $3bn valuation in New York one 12 months in the past. Its market worth has now sunk to $88mn.

It’s the newest funding to show bitter for Tiger, which has been hit by losses of about $17bn throughout this 12 months’s sell-off of publicly traded know-how shares, marking one of many greatest greenback declines for a hedge fund in historical past.

Missfresh pioneered a method of blanketing cities with mini-warehouses that mixed storage of a small variety of high-volume objects with supply capabilities, permitting its pink-clad riders to zip contemporary fruit and meats to Chinese language households in roughly 30 minutes.

Administration claimed the low-cost mannequin would permit Missfresh to profitably ship groceries, a notoriously powerful proposition. Traders stepped as much as fund the enterprise, with Tiger placing in $117mn over a number of years for a 12 per cent stake whereas Goldman Sachs injected $66mn 

The funding propelled Missfresh’s enlargement into 16 Chinese language cities the place it ran 625 warehouses as of June 30 final 12 months. However the individual near Missfresh mentioned the corporate had “blindly expanded, blindly opened new warehouses and blindly entered new cities”. 

“The money circulation is drying up . . . if we don’t pay distributors on time, it’ll trigger a scarcity of provides,” mentioned the one that requested to not be named.

Missfresh denied it was looking for an acquirer and mentioned the corporate had adequate provides.

Whereas Missfresh has been unable to concern audited financials or its annual report for the 12 months to December 31, the corporate estimated losses final 12 months hit Rmb3.7bn.

The cash-starved start-up can be dealing with a number of lawsuits in China as money owed pile up. One provider surnamed Li instructed the Monetary Occasions that his firm was nonetheless owed greater than Rmb226,00zero for fruits offered to Missfresh in 2020.

“All of the funds went easily in 2019 however since 2020 they’ve began delaying funds, so we stopped supplying . . . and we’re bringing it to courtroom,” mentioned Li.

This 12 months, Missfresh has moved to shut down its mini-warehouses in no less than 9 cities, leaving primarily clients in Beijing, Shanghai and Tianjin capable of get pleasure from its quick 30-minute supply service.

Earlier this month, the corporate admitted workers in a single enterprise unit had created “questionable transactions” that led to revenues being overstated by Rmb677mn within the first 9 months of final 12 months.

The corporate mentioned an impartial evaluate discovered no proof of govt involvement and that the implicated workers had left the corporate. With its share costs languishing beneath a greenback, Missfresh faces the specter of delisting in November.

Missfresh mentioned closing warehouses in some cities was achieved to cut back prices and that some provider merchandise didn’t meet its requirements, which may have triggered delayed funds. Tiger World didn’t instantly reply to requests for remark.