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Chagee kicks off New York IPO amid choppy market

conditions

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Chinese tea firm targets $411 million raise in IPO

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Cornerstone investors intend to purchase $205 million of

shares

in IPO

By Arasu Kannagi Basil, Pritam Biswas

April 10 (Reuters) - Chinese tea chain Chagee said on

Thursday it was targeting a valuation of up to $5.1 billion in

its U.S. initial public offering, braving choppy market

conditions.

Market volatility stemming from uncertainty over U.S. trade

policy has tempered IPO activity as companies adopt a

wait-and-see approach before proceeding.

Shanghai-based Chagee is seeking up to $411 million by

offering nearly 14.7 million American depositary shares priced

between $26 and $28 each.

The IPO also comes as the world's two biggest economies are

locked in an escalating trade war, prolonging macroeconomic

uncertainty.

While Chagee warned of some hit from the tariffs, it said

"cross-border trade" was not its principal business. All of its

products are manufactured in China.

China in recent years has tightened scrutiny around firms

pursuing offshore IPOs. Last year, Beijing stalled listings of

several tea beverage companies worried over the poor performance

of listed peers.

Chagee, which specializes in raw-leaf fresh milk tea, is the

latest in a string of Chinese consumer brands to pursue offshore

IPOs in recent months.

Chinese bubble tea firms Mixue and Guming

went public in Hong Kong earlier this year.

Chinese IPOs on U.S. exchanges raised $1.15 billion in 2024,

compared with $469.7 million in 2023, according to data compiled

by LSEG. That amount was still far below the $12.85 billion

raised in 2021.

"The IPO market rarely shuts down completely, and when it

does, it doesn't happen for long," said Matt Kennedy, senior

strategist at Renaissance Capital, a provider of IPO-focused

research and ETFs.

Cornerstone investors have indicated interest in purchasing

Chagee's shares worth up to $205 million sold in the IPO.

RAPID RISE

Founded in 2017 by Junjie Zhang, Chagee opened its first

store in Yunnan province and has since rapidly expanded across

and beyond China.

The tea brand generated 29.5 billion yuan ($4.03 billion) in

sales last year, with over 6,000 teahouses worldwide at the end

of 2024. Nearly all of its stores are set in China under a

franchise scheme.

Chagee plans on serving customers across 100 countries and

selling 15 billion servings annually as it aggressively expands

its global reach.

In recent years, Chagee has expanded across Southeast Asia,

entering Malaysia, Singapore and Thailand.

Chagee will list on the Nasdaq under the symbol "CHA".

Citigroup, Morgan Stanley, Deutsche Bank and CICC are the

lead underwriters for the offering.

($1 = 7.3140 Chinese yuan renminbi)