(Bloomberg) — Hunan Chayue Cultural Industry Development Group Ltd., also known as Sexy Tea, is looking to do an initial public offering in the US instead of Hong Kong, according to people familiar with the matter.
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The Chinese tea chain earlier this year picked China International Capital Corp. and Morgan Stanley to work on a Hong Kong share sale to potentially raise a few hundred million dollars, Bloomberg News reported at the time.
An IPO in the US could now take place next year, although the timing depends on when Sexy Tea gets approval from Chinese regulators, the people said, asking not to be identified because the information isn’t public. The US shift comes as an increasing number of tea companies have been considering share sales in Hong Kong, two of the people said.
A representative for Sexy Tea declined to comment.
Offshore listings of several tea chains including Mixue Group, Guming Holdings and Auntea Jenny stalled after failing to get approval from the China Securities Regulatory Commission, while bubble-tea maker Sichuan Baicha Baidao Industrial Co.’s 27% plunge on its Hong Kong debut in April also hit momentum. Still, the CSRC has now approved the Hong Kong IPO of Guming.
Chinese regulators earlier this year issued guidelines discouraging certain companies from listing in the domestic A-share market, Bloomberg has reported. They also advised that those reliant on fast-expanding franchise business models couldn’t list locally. Many milk-tea chains rely on such models.
Listing requirements are less stringent offshore, including in the US, boosting their attractiveness as trading venues for Chinese firms.
About $10.5 billion has been raised through first-time share sales in Hong Kong this year, a big increase from 2023 but below many previous years.
Founded in Changsha, Hunan province in 2013, Sexy Tea runs a network of teahouses in China, as well as cafes and lemon tea shops, according to its website. It also sells house brand products such as tea utensils and stationery.
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