Bubble Tea Chain Nayuki Obtains Go-Ahead for $500 Million Hong Kong IPO

(Source: Nayuki)

Premium bubble tea chain Nayuki Holdings passed a hearing for its initial public offering (IPO) on the Hong Kong Stock Exchange on Sunday, paving the way for the company to become the first publicly-listed Chinese high-end beverage brand.

Nayuki filed an application for the Hong Kong listing on the eve of the Lunar New Year, seeking to raise up to $500 million, IFR Asia reported. With JP Morgan, CMB International and Huatai Financial acting as the joint sponsors, the company will kick off a roadshow as soon as next week.

According to its prospectus, Nayuki’s revenue almost tripled from 1.09 billion yuan ($170.28 million) in 2018 to 3.06 billion yuan ($478.32 million) in 2020. The company reported 16.64 million yuan ($2.6 million) in net profit last year, and currently claims a customer base of nearly 35 million members. Almost 70% of the orders are made online, while 70% of the company’s consumers are Gen-Z and millennials.

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The bubble tea unicorn intends to use the IPO proceeds to further expand the teahouse network, digitalize operations and boost supply chain capabilities, The Standard reported.

Well-known for its refreshing fruit tea, foamy bubble tea and fancy baked goods, Nayuki currently operates 556 stores across mainland China, Hong Kong, Singapore, Japan and the US. It plans to open 300 new stores in 2021 and 350 next year in higher-tier Chinese cities, of which around 70% will be “Nayuki Pro” shops – a new type of plush teahouse launched last November. Unlike previous Nayuki stores, Nayuki Pro shops are mostly located in densely-populated business areas, offering novel tea drinks and baked goods to refresh commuters’ minds.

Founded in 2015 by an entrepreneurial couple, wife Peng Xin and husband Zhao Lin, Nayuki’s key target consumers are young professional women with a craze for milk tea products. Peng said in an interview with domestic media outlet Chinese Entrepreneur that she aims to fulfil the needs of modern urban women by using healthy ingredients and designing the brand’s teahouses as spaces suitable for socializing.

According to a report by China Insights Industry Consultancy, the Shenzhen-based company ranks second in Chinese premium teahouse chains with a market share of 17.7%, trailing only HeyTea which holds a 25.5% market share and a valuation of $2.5 billion. Nayuki was valued at nearly $2 billion after completing its latest funding round in December, which attracted investors including Jack Ma’s Yunfeng Capital, Bloomberg News reported.

The Chinese tea beverage market is twice as big as the Chinese coffee market, according to a report released by Alibaba’s food delivery arm Ele.me. The total size of the Chinese tea beverage market reached 442 billion yuan ($69.04 billion) in 2020.