Boba tea share sale rakes in US$232m

Reuters and staff reporter

Chinese bubble tea chain Guming has raised US$232 million (HK$1.81 billion) in a Hong Kong initial public offering after setting the price of its shares at the top of an indicated range.

The highly-sought after share sale was in sharp contrast to reports that rival HeyTea has stopped opening new stores amid a bruising and protracted price war among the mainland's boba tea chains.

Guming's pricing was at the top of the HK$8.68 to HK$9.94 per share range flagged to investors when the deal launched on Tuesday.

Guming's IPO ends a regulatory freeze for Chinese bubble tea makers which had been in place for most of last year, as applicants struggled to get formal approval.

A total of 158.81 million shares were to be sold in the IPO but the deal was increased to add a further 23.79 million shares.

International investors bidding for Guming stock had their allocations scaled back following strong demand from Hong Kong retail investors.

Of the IPO stock, 90 percent was set aside for institutional investors when the deal was launched but that was reduced to 56.5 percent, the term sheet showed. Retail investors' allotment was increased to 43.5 percent from 10 percent, indicating strong bidding for stock from those investors.

Guming shares will begin trading tomorrow.

Meanwhile, HeyTea has stopped granting new franchises amid the fierce price war among China's fruit and bubble tea chains.

HeyTea is understood to have issued an internal letter noting that the new tea market is "in its early stages" and that the pause is to avoid damaging consumer loyalty, the Star Market Daily reported.