By Julie Zhu, Scott Murdoch and Kane Wu
HONG KONG/SYDNEY (Reuters) – Offshore share providing plans of not less than three Chinese language bubble tea makers have been placed on maintain by the securities regulator as a result of dour market efficiency of friends in Hong Kong amid weaker client sentiment at residence, mentioned eight sources.
Mixue Bingcheng, Guming Holdings and Auntea Jenny are amongst these whose offshore floating plans have been delayed by the China Securities Regulatory Fee (CSRC) this yr, mentioned the sources with information of the matter.
Mixue, which has roughly 36,000 shops, was seeking to elevate as much as $1 billion in its Hong Kong IPO, which might have been the most important new share sale in not less than a yr within the metropolis, mentioned 5 of the sources.
Guming, with 9,000 shops, aimed to lift as much as $500 million by way of an Hong Kong itemizing, mentioned two of them. However each Mixue and Guming IPO purposes lapsed earlier this yr after six months of ready for the approval, mentioned 4 of the sources.
As a part of guidelines unveiled by the CSRC in March final yr to strengthen oversight of offshore listings, Chinese language firms seeking to record in Hong Kong or New York should first get approval from their residence regulator.
The regulatory transfer to place the bubble tea makers’ IPO plans on maintain has been triggered by the almost 27% Hong Kong debut-day stoop in shares of Sichuan Baicha Baidao Industrial, the Chinese language tea chain referred to as Chabaidao, mentioned the sources.
Chabaidao, which raised $330 million in April, has since fallen 70% from its HK$17.5 per share IPO value.
In response to a Reuters request for remark, the CSRC mentioned that it was advancing the submitting work of the three tea beverage firms in accordance with rules.
“Subsequent, we are going to proceed to optimize the submitting mechanism for offshore listings, constantly enhance the standard and effectivity of submitting, and maintain offshore financing channels open.”
All of the sources declined to be named as they weren’t authorised to talk to the media.
Mixue declined to remark. Guming and Auntea Jenny didn’t reply to a request for remark.
The cautious stance of the regulator underscores the tighter scrutiny of the offshore IPO hopefuls in China, lowering the variety of offers in Hong Kong or New York and stymieing Chinese language firms’ purpose to faucet the capital marketplace for fundraising.
Chinese language firms have raised simply $2.56 billion by way of IPOs in Hong Kong this yr, versus $5.7 billion in the entire of final yr, in accordance with Dealogic knowledge. The whole haul this yr is way beneath the $22.1 billion year-to-date document set in 2021.
REGULATORY CAUTION
The regulatory warning in the direction of offshore share choices by the bubble tea makers stems from low product differentiation and fierce competitors within the sector at a time when shoppers tighten their belts in a slowing economic system.
Highlighting the tea sector’s weak efficiency, Chabaidao final month reported a ten% drop in gross income and 19% fall in gross revenue within the first half of this yr in comparison with a year-ago interval.
Shares in Hong Kong-listed Nayuki, China’s solely publicly traded bubble tea chain earlier than Chabaidao, have dropped greater than 90% since their debut in 2021, when it raised $330 million.
The bubble tea makers usually are not the one ones to take successful from the heightened regulatory warning — Beijing has toughened guidelines for corporations in search of funds offshore, and at present has greater than 110 offshore itemizing hopefuls await its approvals.
Mixue and Guming, China’s largest and second-largest bubble tea chains by retailer rely as of 2023, submitted purposes for his or her IPOs in Hong Kong in January, Hong Kong Inventory Trade filings confirmed.
Each firms have been planning to file once more after updating monetary data for the primary half, two of the eight sources and one other individual with information of the matter mentioned. Nonetheless, they’ve but to do this.
In February, fruit tea chain Auntea Jenny filed for approval to lift as much as $300 million by way of an Hong Kong IPO, in accordance with two sources. Its software has additionally lapsed however the firm plans to refile once more, one of many sources mentioned.