Mixue Group, China’s largest bubble tea chain, saw its stock surge 43% in its Hong Kong trading debut on Monday, following a highly successful HK$3.45 billion ($444 million) initial public offering (IPO). Shares were sold at HK$202.50 each, and the overwhelming interest in the offering caused individual investors in Hong Kong to apply for more than HK$1.8 trillion in margin loans, setting a new record. The demand was so intense that underwriters closed the order book a day earlier than scheduled, according to sources familiar with the matter.
This remarkable debut is fueling optimism about the recovery of Hong Kong’s IPO market, which is expected to double in volume this year. The IPO benefited from a surge in popularity for bubble tea, a sector projected to reach $71 billion in the next three years. Investors, particularly small retail investors, placed bids for shares thousands of times the amount available, signaling strong appetite for Chinese domestic consumer goods brands.
Ben Harburg, founder of CoreValues Alpha, noted, “Whoever wins the mass market wins the world,” emphasizing the demand for affordable consumer products in China. For Mixue’s founders, Zhang Hongchao and Zhang Hongfu, the IPO has significantly boosted their wealth to $8.1 billion, according to the Bloomberg Billionaires Index—surpassing that of former Starbucks CEO Howard Schultz.
Founded in 1997 in Henan province, Mixue has grown into a dominant food-and-beverage brand with over 45,300 locations, surpassing McDonald’s and Starbucks in the number of outlets. The company’s business model relies heavily on franchising, enabling it to expand rapidly, especially in lower-tier cities and towns.
Mixue has kept its prices low, resisting the urge to raise them quickly, unlike some of its competitors. Jamie Zhou, a deputy fund manager at M&G Investments, which invested $60 million in the IPO, praised the company for sticking to its core values. The IPO marks M&G’s first participation as a cornerstone investor in an Asia Pacific listing, meaning the firm is committed to holding the shares for at least six months.
The IPO comes amid fierce competition in the Chinese bubble tea market, with other players such as Guming Holdings and Sichuan Baicha Baidao also pursuing public listings in Hong Kong. Mixue’s offering is the largest in a year that is shaping up to be Hong Kong’s most lucrative for IPOs since 2021. With major deals like CATL’s upcoming $5 billion offering, Hong Kong’s IPO proceeds are expected to reach over $22 billion in 2025.
However, not all bubble-tea companies have enjoyed the same success. Sichuan Baicha Baidao and Nayuki Holdings, two other players in the sector, have seen their stocks drop below their IPO prices amid stiff competition and waning investor enthusiasm.
Despite these challenges, Mixue’s IPO stands as a testament to the strength of the bubble tea market and the ongoing investor confidence in China’s consumer goods sector.
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