Alibaba-Backed Babytree Slashes Hong Kong IPO
Babytree Group, a Chinese parenting website backed by Alibaba Group Holding Ltd. and Fosun International Ltd., slashed the size of its Hong Kong initial public offering by more than 70% Wednesday amid a weak stock market and a string of lackluster listings.
Babytree is now seeking to raise as much as HK$2.2 billion ($281 million) by selling about 250 million shares, or 15% of its share capital, in a price range of HK$6.80-HK$8.80, according to its prospectus. Earlier, it aimed to raise $1 billion.
The company scaled back its IPO as most new listings in the past year are trading below their initial prices amid a selloff in global stock markets.
Babytree originally planned its listing for late September and has since changed the timetable several times. Now the company said it plans the listing for Nov. 27 after a global offering began Wednesday followed by sales in Hong Kong starting Thursday.
Morgan Stanley, Haitong International Securities Group and China Merchants Securities are joint sponsors of the flotation.
Pressured by concerns about slowing growth in the world’s second-largest economy and an escalating China-U.S. trade war, Hong Kong’s benchmark Hang Seng index is down 23% from its January peak.
Four recent major listings of Chinese companies in Hong Kong — smartphone maker Xiaomi Corp., mobile telecom tower operator China Tower, and the biotech businesses Ascletis Pharma and BeiGene — have all seen their shares trading below the IPO prices.
On Tuesday, Tencent Holdings-backed online Chinese travel firm Tongcheng-Elong also cut the size of its Hong Kong IPO from $1 billion no more than $233 million.
Established in 2007, Babytree bills itself as China’s largest online community for parents with 200 million monthly active users. Babytree operates an online platform and mobile app for parents to share pregnancy and parenting information. It also runs an e-commerce platform and develops childhood education services.
Babytree filed its preliminary prospectus in June just after it secured a $214 million strategic investment from Alibaba, which gave the e-commerce giant a 9.9% stake in Babytree. The deal valued the company at 14 billion yuan.
Babytree’s other large shareholders include Chinese conglomerate Fosun and U.S.-listed Chinese after-school tutoring specialist TAL Education Group. After the IPO, Fosun will hold 21.11% and TAL 8.66%.
Babytree posted revenue of 408 million yuan in the first half of 2018, primarily from advertising, e-commerce and paid online lessons, up 13% from a year ago. It reported a loss of 2.18 billion yuan for the period, versus a 388 million loss a year ago.
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