Chinese power bank rental company Energy Monster has recently announced its intentions to go public in the United States. According to reports from Sina Technology, the firm officially filed the required documents to the US Securities and Exchange Commission on March 13.
The corporation primarily operates to provide power bank rental solutions for consumers needing to charge their devices outside the home. By scanning a QR Code, mobile device users can rent a charging device for their phones from one of the designated Energy Monster locations, which are distributed in commercial areas such as a shopping malls or business offices. Device rental income serves as the primary source of income for Energy Monster: According to data published in its filing documents, the company recorded 2.7 billion yuan ($415.4 million) in 2020 as sale revenue, accounting for about 96.5% of the company’s total income.
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Energy Monster achieved a profit of 75.4 million yuan in 2020 ($11.6 million), with a net profit margin of 2.7%. However, these numbers are significantly lower than the previous year. In 2019, Energy Monster enjoyed a net profit of 166.6 million yuan ($25.6 million), driving up its net profit margin to a rate of 8.2%.
Pandaily reported earlier that the company is planning to raise $300 million USD in its efforts to go public. The shared power bank provider was founded in Shanghai in 2017 and currently has more than 149 million registered users, and provides rental services in more than 1500 locations across China.
Energy Monster also listed several risk factors, as required in its registration statement. Most of the company’s risks involve intensive competition, rapidly changing technological updates, as well as the costs, risks, and uncertainties surrounding its growth and expansion strategies. The company also acknowledged the impact of the COVID-19 pandemic on its business operations, including the inability of employees working in a common office, wavering consumer confidence, disruptions in economic activity due to public health measures and lockdowns, and the impact on supply chains.
The company also revealed ongoing litigation on an issue concerning its founder, Mr. Mars Guangyuan Cai: “we recently became aware of a lawsuit filed by two individuals alleging that our chairman and chief executive officer, Mr. Mars Guangyuan Cai, had failed to fulfil an alleged promise to gift a 3% equity stake in our VIE [variable interest entity] to the plaintiffs.”
The statement further acknowledged the uncertainties around this legal dispute and the potential impacts that the case can bring to the company’s operations: “Mr. Cai’s PRC litigation counsel, AllBright Law Offices, has advised him in its written legal opinion that the plaintiffs’ claims are baseless and frivolous, and Mr. Cai is contesting the claims vigorously. However, it is inherently difficult to predict the outcome or duration of any court proceedings in China, and there can be no assurance that Mr. Cai will be able to prevail in the lawsuit or that he will be able to settle the lawsuit on terms favorable to him. Moreover, we cannot guarantee that additional legal actions relating to or arising out of the lawsuit would not be threatened or brought against us, Mr. Cai, or our other directors and officers in the future, nor can we predict the potential impact of any such actions on our reputation, business, financial condition and results of operations.”
“If the plaintiffs are successful in pursuing their claims, especially if we become liable as a result of these proceedings, the possible range of loss to our VIE and our business in general would be difficult to assess. An adverse ruling could have a materially adverse effect on our reputation, capital structure (including potential dilution to the shareholders of our VIE), business and financial condition. The lawsuit may require us to incur additional resources and divert attention of Mr. Cai and other management, which could in turn harm our business.”
If successful in its bid to go public in the US, Energy Monster will become the first Chinese company rooted in the ‘sharing economy’ business model to be listed in the US.
Prior to going public, Energy Monster has completed five rounds of financing, including its latest round which amounted to 500 million yuan ($76.9 million) through support from by investors including SoftBank Ventures Asia, BOC International, Goldman Sachs China, Sky9 Capital, Hillhouse Capital Group, Shunwei Capital, Advantech Capital, and former Meituan COO Jiawei Gan.