(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)