Heytea seeks more cash in market bid

Mainland popular tea shop Heytea raised capital from Tencent (0700) and Sequoia Capital and the firm's valuation reached eight billion yuan as it expects to list soon, a mainland online page reported.

Gary Poon

Tuesday, May 14, 2019

Mainland popular tea shop Heytea raised capital from Tencent (0700) and Sequoia Capital and the firm's valuation reached eight billion yuan as it expects to list soon, a mainland online page reported.

An unnamed source told Bluehole New Retail that it is in a third round of financing after the shop raised 100 million yuan from IDG Capital and investor He Boquan and 400 million yuan from BA Capital and DragonBell Capital, a subsidiary of Meituan Dianping (3690).

Heytea would not comment.

Mainland research company Tianyancha said founder Neo Nie Yunchen is holding 29.23 percent and He 9.31 percent of shares, while DragonBell Capital and BA Capital are holding 10 percent and 0.9 percent of shares.

The tea shop was founded by Neo Nie Yunchen, aged 21, in Jiangmen, Guangdong, in 2012. It was formerly known as Royaltea. He said sales surged after it launched cheese tea.

Heytea has more than 200 shops in the mainland with four shops in Hong Kong and two shops in Singapore. The price of a cup of tea is between HK$18 and HK$49. Xiao Shuqin, Heytea's publicist, said monthly revenue had been more than 100 million yuan since last August.

Heytea launched its first shop in Hong Kong in Sha Tin in December. Three hundred people line up outside the store before it opened.

Market rumors said that Heytea paid them to queue in front of the shop but Nie denied it and said its success relied on good reputation.

The second largest shareholder, He is ranked No 349 in the Forbes 400 richest Chinese with US$545 million and is the co-founder of Chinese budget hotel chain 7 Days Group Holdings. He also invested in a mainland beverage company Robust between 1989 and 2002.

Sequoia Capital is based in America with a public market value of more than US$3.3 trillion. It has investments in more than 250 companies, including Apple, Google, Airbnb, Whatsapp and Instagram.

Other mainland beverage companies are also seeking to list in the market. Luckin coffee plans to list in the US market on May 16 and raise nearly US$600 million while Coffee Box and Naixuecha have finished a few rounds of capital raising.