Feb 21 (Reuters) - China's largest bubble tea and drinks

firm, Mixue Group, is seeking to raise HK$3.45 billion ($443.66

million) in a Hong Kong initial public offering, a regulatory

filing showed on Friday.

The company started bookbuilding on Friday for its sale of

17.1 million shares at a fixed price of HK$202.5 each, with the

stock set to begin trading on the Hong Kong Stock Exchange on

March 3.

Mixue will be valued at $9.8 billion and five cornerstone

investors have subscribed for $200 million worth of stock, the

filing showed.

Mixue, which had earlier planned to raise up to $1 billion

in the IPO, scaled back the size of its share sale as it was not

in desperate need of cash, Reuters reported, citing sources.

It has 45,000 stores in mainland China and 11 other

countries through a major franchise network, the filings show.

Mixue, famous for its playful snowman mascot known as Snow

King, wearing a crown and a red cloak, has quickly become

popular among young consumers in recent years.

It is best known for selling fruit and tea drinks, coffee

and ice cream, typically at a cost of about $1, it said.

By the end of September, over 99% of Mixue Bingcheng's more

than 45,000 stores were franchised, its regulatory filings

showed, though the company does not primarily depend on

franchise fees for its income.

Franchise fees made up just 2.4% of total revenue in the

first three quarters of 2024, its filing showed.

The bulk of income comes from the sale of merchandise and

equipment to franchised stores, which are required to buy these

items from Mixue.

Mixue is considered the world's largest fast-food chain by

store count, but there is still room for growth in China, said

independent food and beverage analyst Zhu Danpeng.

"In counties, towns, and villages, there are still many

small, non-standardized single stores," Zhu said. "As far as I

know, there are nearly 200,000 such stores that could

potentially be replaced by Mixue."

The company was started in 1997 in the northern city of

Zhengzhou by founder Zhang Hongchao, who began with a homemade

shaved ice machine.

Mixue said it sold 7.1 billion drinks in the nine months

ended September last year.

($1=HK$7.7763)