China's largest bubble tea company, Mixue Group, is set to kick off bookbuilding for its Hong Kong initial public offering by the end of February, aiming to raise approximately $500 million, as disclosed by three reliable sources.
Mixue is planning to debut on the Hong Kong Stock Exchange in early March, as one inside source mentioned. With 40,000 stores throughout China, as reported in its regulatory documents. Confidentiality was requested by the sources and Mixue opted not to provide a comment.
Originally targeting up to $1 billion in its Hong Kong IPO, the scale of the offering has been reduced because the company is not in urgent need of funds, two sources revealed.
According to regulatory filings, Mixue recorded a net profit of 3.5 billion yuan ($478.96 million) in the nine months leading up to September 30 last year, marking a 42.3% year-on-year increase.
The funds acquired from the IPO are intended for expanding production facilities and broadening its beverage selection, as per the filings.
Following the successful $232 million IPO of a rival bubble tea company, Guming, which was oversubscribed and priced at the top end, Guming shares commenced trading in Hong Kong, with a 12% surge in gray market trading conducted by Phillip Securities the day before official listing.
The recent IPOs of Guming and Mixue suggest a relaxation in regulators' stance towards listing applications from bubble tea firms after concerns were raised due to Sichuan Baicha Baidao's disappointing stock performance post-IPO, dropping 27% on its debut day in April last year, and a subsequent 45% decrease in its stock value.