Mixue, China's largest bubble tea chain, made a remarkable debut on the Hong Kong stock market, with its shares soaring 28% after a highly anticipated initial public offering (IPO). Known for its popular milk tea, fruit drinks, ice cream, and coffee, Mixue has captured the attention of investors globally with its promising market entry.
The company's IPO attracted significant interest, leading to support from five cornerstone investors: M&G Investments, HongShan Growth, Persistence Growth Limited, HHLR Fund, and Meituan's Long-Z Fund. Mixue priced its IPO at HK$202.5 per share ($26.04) for 17.06 million shares, raising a total of HK$3.45 billion through this offering. The enthusiasm among investors was evident in the oversubscription rates, which reached more than 35 times for the international offering.
Initially, the company allocated 10% of the IPO to the Hong Kong offering and 90% to the international offering. However, due to overwhelming demand, Mixue reallocated more shares to the Hong Kong market, increasing its share from 10% to 50%. The Hong Kong offering was over 5,200 times oversubscribed, highlighting the immense investor interest in Mixue's growth potential.
Bank of America Securities, Goldman Sachs, and UBS acted as bookrunners for the IPO. The strategic decision to increase the allocation to the Hong Kong offering reflects the strong appetite for Mixue's shares in the local market. The other 50% of the IPO remained allocated to international investors.
The IPO comes in the wake of a similar public offering by Guming's, another Chinese bubble tea chain. However, Mixue's stature as the largest bubble tea chain in China set it apart, attracting a diverse range of investors eager to invest in its expansion ambitions.
Douglas Kim, an IPO analyst at Douglas Research Advisory and contributor to Smartkarma, commented on Mixue's promising market outlook:
"Our base case valuation of Mixue Group is implied market cap of HKD 96 billion or target price of HKD 254, which is 26% higher than the initial IPO price."