HONG KONG (Aug 16): China's leading online parenting firm Babytree Group, backed by e-commerce giant Alibaba Group, plans to raise up to US$1 billion in a Hong Kong initial public offering (IPO) in October, people close to the transaction told Reuters.
Babytree, which also counts conglomerate Fosun International among its backers, is looking to raise US$800 million to US$1 billion from the float, the people said on condition of anonymity as the plans have not been made public. It is targeting a valuation of US$3 billion-US$5 billion, they added.
Babytree plans to seek approval from the Hong Kong stock exchange's listing committee in late September, the people said.
Babytree did not immediately respond to a request for comment from Reuters.
The proposed float is the latest on a packed Hong Kong IPO calendar for the coming months, including a US$4 billion deal from online food delivery-to-ticketing services platform Meituan Dianping and a US$1 billion listing of popular hotpot chain Haidilao.
Escalating Sino-US trade tensions are, however, making investors more cautious toward new listings. Tit-for-tat tariffs from Washington and Beijing have roiled global markets, with the Hang Seng Index down 19% from its January peak.
Four recent major listings of Chinese firms in the city — smartphone maker Xiaomi Corp, mobile telecoms tower operator China Tower as well as biotech firms Ascletis Pharma and BeiGene — have all seen their shares trading below the IPO prices.
In a preliminary IPO prospectus filed in late June, Babytree said it is China's largest maternity and child-focused online community and had 139 million monthly active users last year.
Its main platform — Babytree.com — allows parents to receive and share pregnancy and parenting information. The company, founded in 2007, has also developed other outlets such as Babytree Parenting mobile app and e-commerce site Meitun Mama.
Alibaba in late May invested US$214 million in Babytree, valuing the 11-year-old firm at 14 billion yuan (US$2 billion), betting on the latter's business growth amid China's easing of control over decades-long family planning policy.
Babytree posted revenue of 730 million yuan (US$106 million) in 2017, primarily from advertising and e-commerce businesses, up 43% from a year ago. It reported 911 million yuan loss for the period, versus a 935 million loss a year ago.
According to the prospectus, Babytree had connected 338 advertising clients and 2,253 third-party e-commerce vendors as of the end of 2017.
It has hired China Merchants Securities, Haitong International and Morgan Stanley as joint sponsors for the IPO.
(US$1 = 6.8916 Chinese yuan)