Chinese tea chain Chagee valued at $6.2 billion as shares pop in Nasdaq debut

Reuters
04-17
UPDATE 3-Chinese tea chain Chagee valued at $6.2 billion as shares pop in Nasdaq debut

Adds analyst comments in paragraphs 5 and 14, details throughout

By Ateev Bhandari

April 17 (Reuters) - Chinese tea chain Chagee CHA.O secured a valuation of $6.2 billion after its shares gained 21% in their Nasdaq debut on Thursday, defying volatility stemming from the United States' trade war with Beijing.

The company's American depositary shares opened at $33.75 apiece, compared with the initial public offering price of $28.

Chagee sold 14.7 million ADS at the top of its marketed range of $26 to $28 per share to raise $411 million, in the biggest listing for a Chinese consumer company since vaping firm RLX Technology's $1.4 billion IPO in January 2021, according to Dealogic data.

The market reaction underscores sustained investor confidence in Beijing's promises to boost domestic consumption and support capital markets, as confidence sours among businesses and consumers from an all-out economic war between the two largest world economies.

"Many China-linked IPOs we have seen recently are plays on the growth of the Chinese consumer and therefore are relatively insulated from any tariff-linked disturbances, we believe," said IPOX CEO Josef Schuster.

Chinese bubble tea firms Mixue 2097.HK and Guming 1364.HK went public in Hong Kong earlier this year.

Founded in 2017 by Junjie Zhang, Chagee had nearly 6,700 teahouses worldwide at the end of March, with most of them located in premium shopping malls across China under a franchise scheme.

The company generated 29.5 billion yuan ($4.03 billion) in sales last year.

Four cornerstone investors, including CDH Investment Management and fund manager Redwheel, had indicated their interest on buying $205 million worth of ADSs sold in the IPO. Redwheel is one of the biggest investors in British retailer Marks & Spencer MKS.L.

Zhang will continue to own nearly 54% of the company's Class B shares that carry 10 votes each, giving him 89% of the total voting power.

ALL OPTIONS ON THE TABLE

The amount raised by Chinese companies on U.S. exchanges has dropped 91%% from 2021 to $1.39 billion in 2024, according to Dealogic data, after Chinese ride-hailing giant Didi Global was forced to delist its shares following a backlash from Chinese regulators.

Treasury Secretary Scott Bessent did not rule out removing Chinese stocks from U.S. exchanges in an interview with Fox Business Network last week, saying that all options were on the table.

U.S. investors might have up to 40% of their equities in international companies, according to Matt Kennedy, senior strategist at Renaissance Capital, a provider of IPO-focused research and ETFs.

"China will be a sizable chunk of that."

(Reporting by Ateev Bhandari in Bengaluru; Editing by Shilpi Majumdar and Maju Samuel)

((Ateev.Bhandari@thomsonreuters.com;))

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