The popularity of the stock helps fuel optimism over the revival of Hong Kong’s IPO market, which is projected to double this year. Enormous demand — mom-and-pop investors bid for thousands of times the shares they could buy — helped Mixue capitalise on the rage for drinks like bubble tea, a market that’s forecast to surge to US$71 billion ($95.75 billion) in three years.
“Whoever wins the mass market wins the world,” said Ben Harburg, founder of CoreValues Alpha. “Demand remains high for Chinese domestic fast moving consumer goods brands.”
For the founder, Zhang Hongchao, and his younger brother, Zhang Hongfu, the share sale bolstered their combined fortune to US$8.1 billion according to the Bloomberg Billionaires Index. That’s more than what Howard D. Schultz, the former CEO of Starbucks, is worth.
Founded in 1997 in central China’s Henan province, Mixue has morphed into a food-and-beverage giant with over 45,300 shops — more than Starbucks or McDonald’s Corp. — by selling bubble tea, coffee and ice cream. Mixue relies on a franchising model to help it open shops across the country, with a deep penetration into lower-tier cities and towns.
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But cutthroat competition is prompting the tea chains to raise money to keep expanding and opening more stores, with players such as Guming Holdings and Sichuan Baicha Baidao Industrial going public in Hong Kong in the past year.
Mixue’s float has been the largest so far in what’s shaping up to be Hong Kong’s biggest year for IPOs since 2021. With mega deals such as those of CATL, which is expected to raise more than US$5 billion, on the horizon, proceeds from going public are poised to double to more than US$22 billion in 2025, according to Bloomberg Intelligence.
The trading debut comes weeks after that of Guming, which sells its tea under the “Good me” brand and focuses its business in smaller cities and townships in China. That stock is up 16% since it began trading in mid February.
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Still, not all bubble-tea makers have fared as well. Sichuan Baicha Baidao, which came to market in April and sells its products under the Chabaidao brand, and rival Nayuki Holdings have seen the initial hype over their shares fizzle and are now both trading below their IPO prices amid fierce competition in the industry.
As for Mixue, it’s counting on its market dominance to make it a more desirable investment. Its IPO became so sought after that Hong Kong individual investors applied to borrow more than HK$1.8 trillion to buy the stock.
The flood of applications led underwriters to stop taking orders a day earlier than planned, people familiar with the matter said.
