Spilling the tea on Hong Kong IPOs
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Spilling the tea on Hong Kong IPOs

ChaPanda boasts over 8,000 franchises across 31 Chinese provinces and cities | Photo: Getty

Several Chinese bubble-tea makers are looking at Hong Kong IPOs. When high-end tea maker Nayuki listed three years ago investors drank it up, but the deal now trades 90% below its listing price. Can a new group of issuers revive the market?

On April 23, Hong Kong welcomed its largest initial public offering of 2024 so far, as bubble-tea maker ChaPanda debuted, raising HK$2.6 billion ($332 million). The deal size pales in comparison with previous largest offerings, being half the size of liquor company ZJLD Group’s 2023 IPO, a quarter of battery maker CALB’s 2022 listing, and a mere 20th of short-video platform Kuaishou’s 2021 debut.

In addition:

  • Regulatory thaw
  • Nevertheless, the market struggled to digest the offering, with ChaPanda’s stock price plummeting 27% on the first trading day.

    "There is still a huge mismatch in pricing expectations between issuers and investors," a banker involved in the deal tells Euromoney. "ChaPanda sought a price-to-earnings ratio of 15 times, but the market was only willing to pay 10 to 11 times."

    This dip wasn’t entirely unexpected given the lack of cornerstone investors, which typically stabilize new listings.

    According to insiders, the IPO was another non-market-oriented transaction, akin to many Hong Kong listings in the last two years. The IPO’s investor pool primarily comprised local governments and players across the company’s supply chain, including both upstream and downstream business partners.


    larissa ku 960.jpg
    Senior reporter for Asia
    Larissa Ku is a senior reporter for Asia. She joined Euromoney in 2023. Based in Hong Kong, she has spent more than a decade covering private equity, banking, treasury and fintech across various brands, including Asian Venture Capital Journal – where she won State Street Institutional Press Awards Asia Pacific 2023’s technology journalist of the year – Corporate Treasurer and DigFin.
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