Why Pinduoduo is unlikely to detach itself from Tencent

Many startups dream of luring a high-profile investor like Tencent. Apart from raising the startup’s public profile, a prominent investor helps draw attention from other would-be investors and is therefore hugely beneficial from a funding point of view.

But there is always an exception.

Pinduoduo, a Chinese e-commerce site that is yet to celebrate its third anniversary, launched a US initial public offering on Tuesday under the name of Walnut Street Group, and aims to raise up to $1.63 billion.

Preliminary terms show the company plans to issue 85.6 million American depositary shares at between $16 and $19 each in a deal sponsored...