According to eight sources, the securities commission has placed the plans for at least three Chinese bubble tea manufacturers’ offshore share offerings on hold because of their peers’ dismal market results in Hong Kong and the country’s declining consumer attitude.
According to people with knowledge of the situation, Mixue Bingcheng, Guming Holdings, and Auntea Jenny are a few companies whose intentions for offshore floating have been put on hold by the China Securities Regulatory Commission (CSRC) this year.Five of the sources claimed that Mixue, which has about 36,000 outlets, was hoping to raise up to $1 billion in its Hong Kong IPO, making it the largest new share sale in the city in at least a year.
According to two of them, Guming, which has 9,000 outlets, wanted to raise as much as $500 million through a Hong Kong listing. However, four of the individuals claimed that after waiting for permission for six months, the IPO applications for Guming and Mixue both expired earlier this year.Chinese companies wishing to list in Hong Kong or New York must first obtain approval from their home regulator, per regulations announced by the China Securities Regulatory Commission (CSRC) in March of last year to enhance monitoring of offshore listings.
The roughly 27% drop in shares of Sichuan Baicha Baidao Industrial (2555.HK), opens new tab, the Chinese tea chain known as Chabaidao, on the Hong Kong debut day prompted the regulatory action to halt the bubble tea manufacturers’ preparations for an initial public offering (IPO), according to the sources.Following its $330 million April fundraising, Chabaidao’s share price has dropped by 70% from its HK$17.5 IPO price.
The CSRC stated that it was advancing the three tea beverage businesses’ filing process in compliance with regulations in response to a Reuters request for comment.
“Thereafter, we will keep refining the offshore listing file process, enhancing the caliber and effectiveness of filings, and maintaining access to offshore funding sources.”
Since none of the sources had permission to communicate with the media, they all declined to be identified.
Mixue choose not to respond. An inquiry for comments was not answered by Guming or Auntea Jenny.
The regulator’s cautious approach highlights the stricter examination of Chinese companies hoping to raise money through offshore initial public offerings (IPOs). As a result, fewer agreements are being made in Hong Kong or New York, hindering Chinese companies’ efforts to access the capital market.
Dealogic data shows that Chinese companies raised just $2.56 billion through initial public offerings (IPOs) in Hong Kong this year, compared to $5.7 billion for the entire previous year. The $22.1 billion year-to-date record set in 2021 is significantly less than the entire amount collected this year.
RECULATORY WARNING
Due to minimal product distinction and intense rivalry in the industry at a time when consumers are tightening their belts in a faltering economy, regulators are being cautious when it comes to the bubble tea makers’ overseas share offerings.
The poor performance of the tea industry was highlighted by Chabaidao’s 10% decline in gross sales and 19% decline in gross profit last month.
