On Dec 11, Chinese toy company Pop Mart successfully launched its initial public offering (IPO) in Hong Kong, with shares skyrocketing by 100.26% in value.
Pop Mart had originally priced its shares at HK$38.50, but their valuation quickly jumped to HK$77.10, with the company’s market value reaching at least $14 billion. Pop Mart broke the record as the best-performing debutant for deals over $500 million in Hong Kong, according to Refinitiv data.
As a market leader in a fast-expanding sector, the business got a great investment for a reason. One of its key backers, Shanghai-based private equity firm Loyal Valley Capital, led Pop Mart’s latest funding round in May 2020 and has invested a total of $87.5 million in the company.
Lisa Ye, a Loyal Valley Capital Partner who heads the consumer team, praised Pop Mart’s sustained momentum, saying “Pop Mart has built a commercial closed-loop process from IP incubation to factory production, from online and offline sales to content communities, which has enabled high margins and sets it up for a successful IPO.”
Pop Mart’s unique selling point is its “mystery” toy boxes – literally translated to “blind box” in Chinese -, whose content is not known to customers purchasing the item.
Joyce Wang, a college student, told Pandaily she loves shopping at Pop Mart. “If the toy didn’t come in a mysterious box, I may not purchase it,” said Joyce. “ I enjoy the excitement of opening a box of unknowns and the surprise of getting the cute toy I want.”
Affluent middle class and young people provide a huge potential customer base with strong purchasing power and demand for designer collectibles. Just consider that sales of pop toys and collectibles reached 20.7 billion yuan in China last year, according to Frost & Sullivan.
When it comes to leading this Chinese toy culture revolution, Pop Mart has received tremendous help from its joint global coordinator and key advisor, China Renaissance Holdings Limited. Huaxing Growth Capital, the flagship investment arm of China Renaissance, backed Pop Mart’s fundraising in May 2020 and the company has further contributed to Pop Mart’s successful listing by securing several quality investors.
Fan Bao, the Chairman and Chief Executive Officer of China Renaissance and Founding Partner of Huaxing Growth Capital said that “Pop Mart is at the forefront of companies seeking to capitalize on the historic changes to the consumer market’s preferences, which are driven by the younger generation’s shift in consumption patterns. As an investor and a long-term partner, we believe that Pop Mart’s highest achievement lies ahead of it, and we look forward to working more closely with them going forward.”
Growing its business from a niche market to mainstream pop culture, Pop Mart has established an integrated platform covering the entire industry chain of pop toys, including artists development, IP operation, consumer access, and pop toy culture promotion, and is committed to “lighting up the passion of fans and bringing them joy”.