Chinese tea shop giant Sichuan Baicha Baidao aims to raise US$330 million in Hong Kong’s biggest IPO of 2024

Proceeds will aid Baicha Baidao’s expansion in China as it eyes the boutique coffee industry
It comes after Hong Kong’s IPOs fell 29% in the first quarter to US$604.4 million, the slowest start to a year since 2009

IPO

Mia CastagnoneandSophie Chew

Published: 9:30pm, 15 Apr 2024

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Chinese tea shop giant Sichuan Baicha Baidao Industrial aims to raise HK$2.5 billion (US$330 million) in a Hong Kong initial public offering (IPO), set to be the city’s largest new-share sale of the year, regulatory filings showed on Monday.

The Chengdu-based company is offering 147.7 million shares at HK$17.50 each, for expected proceeds of HK$2.5 billion, after deducting underwriting commissions, fees and estimated expenses, assuming no overallotment option is exercised.

The shares will start trading on the Hong Kong stock exchange on April 23. It will be the biggest IPO of the year so far, after the US$135.7 million raised by RoboSense Technology in January.

It comes after Hong Kong’s first-time stock offerings fell 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 that has a particularly strong presence in the southern provinces of China. The shops sell a range of fruit tea drinks primarily targeted at younger customers.

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Gu Jilin, the head of investment and financing at Baicha, said at a media briefing that the “timing” was right to list, adding that “even amid weaker market conditions, we will continue to attract international investors.”

She said Hong Kong’s market was an attractive place to list given its transparent regulations, international nature, and strong corporate governance capabilities.

Funds raised will go towards domestic expansion plans in China, including branding and promotional activities. The company, founded in 2008, said it had 500 stores by 2019 which had shot up to over 8,000 by 2023.

Wang Hongxue, co-founder and executive director, said the company plans to expand into the boutique coffee industry.

Baicha Baidao has already trialled a store in Chengdu, and while the coffee market is fiercely competitive, it is actively exploring this area. Wang said while there are no plans to launch a coffee franchise, the company will “explore the market” and enter it in a “stable manner.”

Another portion of the IPO proceeds will go towards enhancing digitalisation and supply chain capabilities, and operational efficiency, the company said.

Baicha Baidao’s revenue increased 34.8 per cent from 4.2 billion yuan in 2022 to 5.7 billion yuan last year.

The popularity and growth of the tea market in China has led to a series of companies rushing to list. Bubble tea rivals Mixue and Guming have applied to list in Hong Kong as well.

Mixue, which has roughly 36,000 stores, is looking to raise US$500 million to US$1 billion in its Hong Kong IPO, 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.

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