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Norma Chu, founder of DayDayCook in Sheung Wan on 18 March 2016. Photo: Bruce Yan

Hong Kong’s DayDayCook heads to Nasdaq via merger with a blank cheque company, blazing a new fundraising trail for start-ups

  • DayDayCook has agreed to merge with a Nasdaq-listed blank cheque company in a deal that values it at US$300 million
  • The online recipe hub is the first Hong Kong start-up focusing on retail consumption to seek a US listing via a special purpose acquisition company

DayDayCook, a recipe hub founded by former HSBC banker-turned-online influencer Norma Chu, will merge with a New York-listed special purpose acquisition company (SPAC), becoming the first Hong Kong start-up focusing on internet consumption to head for the capital markets via the so-called blank cheque route.

DayDayCook’s merger with Ace Global Business Acquisitions values the nine-year-old start-up with 80 million active users at US$300 million in enterprise value. The combined company is aiming to raise up to US$40 million from private-equity investors, Ace Global said in a press statement.

“The decision to list in the US is due to the better liquidity on US exchanges, and a broader investor base in the US,” Chu said in an interview with South China Morning Post. “A SPAC structure also gives us more certainty about the listing timetable.”

The merger opens a new path for companies to raise capital and fund their growth, giving a shot in the arm to the 14 Hong Kong-domiciled SPACs that have raised US$2.6 billion so far this year, data from Refinitiv shows. SPACs are takeover vehicles which typically lack any existing business at the point of their initial public offerings (IPOs). They are created purely to raise money to buy assets within a specified period of time, usually within two years of the their IPOs.

A blogger recording a video tutorial at home. Photo: Getty Images
By introducing private equity investors, it enables the blank cheque company to raise more capital after its IPO to cover the cost of buying a target company. Ace Global Business Acquisition has already raised about US$47 million through its April IPO in New York.

It still needs the SPAC investors to approve the deal. If they approve the transaction and no investor redeems their money from the bank cheque company and the fundraising target is reached, the total sum from the US listing for DayDayCook could reach US$87 million.

DayDayCook has already raised about US$40.1 million through five rounds of fundraising, counting the financial backing of such investors as the Alibaba Entrepreneurs Fund, New World Development’s executive vice-chairman Adrian Cheng Chi-kong, and AMTD Group. They may increase their investments and contributions towards the additional US$40 million, Chu said, adding that the company is targeting a completion of the transaction and its listing by the end of this year.

Proceeds raised from the capital market will be used to build its marketing, customer acquisition, and potential merger and acquisition opportunities, Chu said.

Chu, raised in Seattle, established DayDayCook in 2012 after a career in equities research at HSBC Private Bank in Hong Kong. Her online site features short instructional videos on recipes, and sells condiments, sauces and other merchandise. It is looking to branch out to plant-based products, as it taps into the convergence of entertainment, commercials and video in a trend known as “shoppertainment”.

Cheng’s investment vehicle K11 Investment and Alibaba Entrepreneurs Fund, run by this newspaper’s owner Alibaba Group Holding, led the Series B financing round that invested 100 million yuan (US$15.5 million) into DayDayCook. Other early investors also include 500 start-ups, and two other Chinese private equity firms Heyi Capital and MFund.

The Hong Kong company, which claims 5 million of its 80 million viewers are paying users, are chosen out of over 30 other potential acquisition targets that Ace Global, said the SPAC’s chief executive Eugene Wong.

“We consider DayDayBook a new consumer brand goods company, a sector that is unaffected by the current heightened scrutiny and data security concerns miring Chinese tech sector,” he said.

(Corrects currency translation in 10th paragraph.)

This article appeared in the South China Morning Post print edition as: Cooking start-up seeks US listing via blank cheque firm
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