Alibaba-backed Babytree chops Hong Kong IPO by 70 per cent amid glut of new offerings and depressed stock market

Babytree Group, China’s biggest parenting platform operator, slashed the size of its Hong Kong initial public offering by more than 70 per cent as investors’ demand for new shares fades amid a surge in listings in the city and a major sell-off in the equities market.

The company, in which Alibaba Group Holding owns a 9.9 per cent stake and Fosun International a 25 per cent stake, plans to raise as much as HK$2.2 billion (US$282 million) from the first-time sale of up to 250.3 million shares, according to its sales prospectus. It had been reported earlier that it was aiming to raise US$1 billion. Babytree’s shares are expected to start trading on November 27 and the listing price will value the company at HK$14.7 billion.

Babytree, which was founded in 2006 by former Yahoo and Google executive Allen Wang Huainan and private-equity investor Shao Yibo, is the latest company to downsize the value of its IPO, after a jump in the supply of new shares this year and with the benchmark Hang Seng Index entering a bear market.

When asked about why the company had cut its IPO size, Wang, who is also chief executive of the company, said: “To be honest, I do not really care about the IPO size of the company. What I care is after the public offering, whether we have better opportunities to hire talent, build our brands and implement strategic plans.”

The company said, despite the US-China trade war, weak consumption sentiment was not a big concern for it.

“During the past 11 years, there have been ups and downs in the economy. I think in a weak economy, young parents may decide not to buy a new car, a new apartment and luxury goods. They will never decide not to buy baby’s milk powder and paper diapers,” said Wei Xiaowei, head of business at Babytree.