HONG KONG/SYDNEY, Sept 20 (Askume) – Securities regulators have blocked plans by at least three Chinese bubble tea makers for offshore share offerings as weak domestic consumer confidence hurts the market performance of Hong Kong rivals.
Offshore listing plans this year by companies such as Mixue Bingcheng, Guming Holdings and Ancha Jenny have been suspended by the China Securities Regulatory Commission, people familiar with the matter said.
Mitchell, which has about 36,000 stores, plans to raise more than $1 billion in a Hong Kong IPO, which would be the city’s biggest new stock offering in at least a year, five sources said.
Gu Ming Group, which has 9,000 stores, plans to raise up to US$500 million through a Hong Kong listing, two sources said. But Michelle and Gu Ming’s IPO application was cancelled earlier this year after waiting for six months, four sources said.
According to rules issued in March last year by the Securities Regulatory Commission to strengthen oversight of overseas listings, Chinese companies wishing to list in Hong Kong or New York must first obtain approval from their home country’s regulatory agencies.
Shares of Chinese tea chain Sichuan White Tea Baidao Industrial (2555.HK) fell nearly 27% in their debut in Hong Kong as regulators halted the bubble tea maker’s IPO plans, sources said .
Chabaidao raised US$330 million in April, 70% below its IPO price of HK17.5 per share.
In response to a Askume request for comment, the China Securities Regulatory Commission said it was filing registrations for the three tea beverage companies in accordance with regulations.
“In the next step, we will continue to optimize the overseas listing filing mechanism, constantly improve the quality and efficiency of filing, and unblock overseas financing channels.”
All the sources declined to be named as they were not authorised to speak to the media.
Michelle declined to comment. Gu Ming and Aunt Jenny did not respond to requests for comment.
The regulator’s cautious stance highlights the tighter scrutiny China faces of offshore IPO seekers, which will reduce the number of deals in Hong Kong or New York and hamper Chinese companies’ goals of using capital markets to raise funds.
Dealogic data shows that Chinese companies raised only US$2.56 billion through IPOs in Hong Kong this year, compared with US$5.7 billion last year. This year’s total funding is far below the record $22.1 billion so far in 2021.
Supervision is prudent
Regulators’ wariness about overseas stock offerings by bubble tea makers stems from low product differentiation and fierce competition in the industry, at a time when consumers are tightening their belts amid a slowing economy.
Chabeidao reported last month that its total revenue in the first half of this year fell 10% year-on-year, and its gross profit fell 19% year-on-year, highlighting the weak performance of the tea industry.
Hong Kong-listed Kaixue (2150.HK), China’s only publicly traded bubble tea chain before Chabeidao, has seen its shares fall more than 90% since its listing in 2021, when it raised US$330 million.
Bubble tea makers aren’t the only ones affected by increasingly strict regulations. Beijing has also tightened rules for companies receiving funding from overseas , and more than 110 companies looking to list overseas are currently awaiting approval.
Mi Xue and Gu Ming, China’s largest and second-largest bubble tea chains by number of stores, submitted applications for IPOs in Hong Kong in January, according to Hong Kong Stock Exchange filings.
Two of the eight sources and another person familiar with the matter said the companies planned to re-file after updating their first-half financials. However, they have not done so yet.
In February this year, fruit tea chain Aunt Jenny applied for approval to raise up to US$300 million through a Hong Kong IPO, according to two sources. Its application has also expired, but the company plans to reapply, the sources said.
