Sexy Tea Plans IPO in the US Next Year Instead of Hong Kong - Bloomberg News

According to Bloomberg News, Hunan Chayue Cultural Industry Development Group Ltd., known as Sexy Tea, has abandoned its initial public offering (IPO) in Hong Kong and is heading toward a potential IPO in the United States. Earlier this year, the tea chain selected China International Capital Corp. and Morgan Stanley to prepare for a stock sale that could raise hundreds of millions of dollars in Hong Kong, but is now considering arranging an IPO in the U.S. as early as next year.

The timing of the IPO depends on obtaining approval from Chinese regulators. This move aligns with a trend of more tea companies evaluating the option of selling shares in Hong Kong. Foreign IPOs for tea chains such as Mixue Group, Guming Holdings, and Auntea Jenny have been stalled due to a lack of approval from the China Securities Regulatory Commission (CSRC).

Additionally, Sichuan Baicha Baidao Industrial Co.'s 27% drop on its first trading day in Hong Kong in April has impacted the sector's IPO momentum. However, the CSRC has recently granted approval for Guming's Hong Kong IPO. Earlier this year, Chinese regulators published guidelines aimed at discouraging certain businesses from going public in the local A-share market, particularly warning against companies based on rapidly growing franchise models, commonly employed by bubble tea chains.

The appeal of overseas IPOs, including those in the U.S., is partly due to less stringent requirements compared to local markets, making them more attractive for Chinese firms seeking to go public. Hong Kong has raised approximately $10.5 billion through IPOs this year. While this figure represents a significant increase compared to 2023, it still falls short of the totals from many previous years. Established in 2013 in Changsha, Hunan province, Sexy Tea operates a chain of tea houses across China.