Hunan Chayue Cultural Industry Development Group Ltd., known as Sexy Tea, has shifted its focus from a Hong Kong initial public offering (IPO) to a potential listing in the United States, according to Bloomberg News.
The Chinese tea chain, which had earlier in the year selected China International Capital Corp. and Morgan Stanley (NYSE:MS) to assist with a Hong Kong share sale that could have raised several hundred million dollars, is now considering a US IPO as early as next year.
The timing of the IPO is contingent on the receipt of approval from Chinese regulators. This move aligns with a trend where an increasing number of tea companies are weighing the option of share sales in Hong Kong.
Offshore listings for tea chains such as Mixue Group, Guming Holdings, and Auntea Jenny have encountered obstacles, failing to secure the green light from the China Securities Regulatory Commission (CSRC).
Moreover, the disappointing performance of Sichuan Baicha Baidao Industrial Co., which saw a 27% drop on its Hong Kong market debut in April, has affected the sector's listing momentum. However, the CSRC has recently granted approval for Guming's Hong Kong IPO.
Earlier this year, Chinese regulators released guidelines that discouraged certain businesses from pursuing listings in the domestic A-share market. They specifically advised against local listings for companies that depend on rapidly growing franchise models, a common strategy among milk-tea chains.
The appeal of offshore listings, including those in the US, is partly due to less stringent requirements compared to domestic markets, making them more attractive for Chinese firms seeking to go public.
While Hong Kong has seen about $10.5 billion raised through IPOs this year, these figures represent a significant increase from 2023, yet they fall short of the totals from many previous years.
Sexy Tea, which was established in Changsha, Hunan province in 2013, operates a chain of teahouses across China.
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