Tea shop giant aims to raise HK$2.5b in biggest IPO of year
Proceeds will aid Baicha Baidao’s expansion on mainland as it targets boutique coffee industry
Chinese tea shop giant Sichuan Baicha Baidao Industrial aims to raise HK$2.5 billion in an initial public offering, which is expected to be the city’s largest listing of the year, regulatory filings showed yesterday.
The Chengdu-based company is offering 147.7 million shares at HK$17.50 each to raise proceeds of HK$2.5 billion after underwriting commissions, fees and estimated expenses are deducted, assuming no overallotment option is exercised.
The shares will start trading in Hong Kong next Tuesday.
The deal will be the biggest listing of the year so far after the US$135.7 million raised by RoboSense Technology in January.
It comes after the city’s listings fell by 29 per cent in the first quarter to US$604.4 million, the slowest start to a year since 2009, according to LSEG data.
Baicha Baidao operates ChaPanda stores, a popular bubble-tea chain with a particularly strong presence in the country’s southern provinces. The shops sell a range of fruit tea drinks primarily targeted at younger customers.
Gu Jilin, head of investment and financing at Baicha, said at a media briefing the timing of the listing was right, adding “even amid weaker market conditions, we will continue to attract international investors”.
She said Hong Kong was an attractive place to list given its transparent regulations, international nature, and strong corporate governance.
The funds raised will go towards expansion plans in China, including branding and promotional activities.
Baicha Baidao, founded in 2008, said it had 500 stores by 2019, which had shot up to more than 8,000 by last year.
Co-founder and executive director Wang Hongxue said the company planned to expand into the boutique coffee industry.
Baicha Baidao has already run a store in Chengdu as trial. It said while the coffee market was fiercely competitive, it was actively exploring this area.
Wang said while there were no plans to launch a coffee franchise, the firm would “explore the market” and enter it in a “stable manner”.
Another portion of the proceeds would go towards enhancing digitalisation and supply-chain capabilities, as well as operational efficiency, the company said.
Baicha Baidao’s revenue increased by 34.8 per cent to 5.7 billion yuan (HK$6.2 billion) last year from 4.2 billion yuan in 2022.
The popularity and growth of the tea market in China has led to a flurry of companies rushing to list. Bubble-tea rivals Mixue and Guming have also applied to sell shares in Hong Kong.
Mixue, which has roughly 36,000 stores, is looking to raise US$500 million to US$1 billion in its Hong Kong listing, while Guming, with 9,000 shops, is aiming to raise US$300 million to US$500 million, according to sources with direct knowledge of the matter.