What’s new: Shares of Nayuki Holdings Ltd., China’s No. 2 premium tea chain, fell 13.5% during their first trading day in Hong Kong.
The company priced its IPO shares at HK$19.80 ($2.55), representing the upper end of their range. But the stock opened 4.8% lower, and fell further to ultimately close at HK$17.12 on Wednesday.
The retail portion of the offering was 431 times oversubscribed, while the international portion — which reflects demand from big global investors — was oversubscribed by a more modest 17 times.
What’s the background: Nayuki is part of the recent premium tea craze in China, known globally for producing bubble tea and other variants of the traditional Chinese drink. The chain is second only to Hey Tea, which is currently private.
Observers said less sophisticated retail buyers probably liked Nayuki for its strong name recognition. But more sophisticated institutional buyers, which typically dominate mature markets like Hong Kong, worried about intense competition in China’s premium tea market due to low barriers to entry.
Contact reporter Yang Ge (geyang@caixin.com)
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