China's Meituan-Dianping, the world's largest online and on-demand delivery platform, is reportedly in funding round talks to raise 3 billion to 5 billion US dollars, which is likely to value the company at between 25 billion to 30 billion dollars, people with direct knowledge of the matter said to Bloomberg.

It's reported Tencent Holdings Ltd., as well as Tiger Fund are participating in the funding round. The funding is considered as a war chest with which the company will be able to compete with online-to-offline (O2O) rivals like Ele.me and Koubei, which are both backed by Alibaba Group Holding Ltd.

Meituan food delivery couriers. /Tencent Photo

It is expected that the gross merchandise volume of the O2O market in China will reach 1.6 trillion yuan (around 238 billion dollars) by 2018, according to Internet consultant IResearch. Meituan-Dianping is attempting to secure dominant status in China for local Internet services.

The company was established in October 2015 when Meituan, which was once backed by Alibaba, merged with Tencent-backed Dianping. The merger soured Meituan's relations with Alibaba, which eventually sold its majority shares in Meituan.

Alibaba and Tencent, China's biggest Internet companies, are using food delivery and neighborhood services as proxies for their battle in the mobile payment sector.