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Chinese tea company Chagee is about to raise nearly $400 million in its New York debut this week, setting it in a fierce trade war between a choppy market situation and the world’s two biggest economies.
According to a submission to US regulatory authorities, the Shanghai-based chain specializing in coffee-style drinks such as “Teaspressos” and “Teapuccinos” hopes to raise $396 million ahead of the first day of NASDAQ on Thursday.
The company aims to sell 14.6 million shares for $26-28 each, meaning a fully diluted market capitalization of around $5.2 billion.
If successful, it will be the second-largest China list in the US in more than three years, lagging behind only the $411 million raised by electric vehicle group Zeekr in May last year, according to IPO Research provider Renaissance Capital.
Chagee’s offering will be around 120% amid the trade war that economists are hoping to reach global growth just days after the Trump administration increased tariffs in Beijing.
Several major US first releases were postponed shortly after Trump’s so-called “liberation day” tariff announcement on April 2nd.
But Matthew Kennedy, a senior strategist at the Renaissance, said market turbulence had not stopped 24 “waves.”
Chagee’s IPO prospectus lists “trade disputes” as a significant risk factor, along with changes to the “foreign investment law.”
This week Goldman Sachs highlighted growing concerns that Trump has forced Chinese companies to fire the list from the US stock exchange, writing in a memo that “in an extreme scenario, US investors may need to liquidate $800 million worth of holdings in Chinese stock.”
A person close to the Nasdaq told the Financial Times that the exchange had not heard of the issue from the White House.
Also, some market participants questioned why Chaeji, who wants to expand overseas, chose the US, considering rival Chinese tea companies have acquired Holdings and Mix Group has surged by 82% and 51% respectively, and 51% since its launch in Hong Kong in February and March respectively.
“I don’t know why they list them as (US deposit receipts) compared to their local list,” said the US-based fund manager.
The person pointed out the mix’s large subscribed retail orders, but added that the IPO “may work well as a group.”
According to the company’s IPO prospectus, Chagee’s business in China is booming. At the end of last year, it operated 6,440 tea houses (97% in China), an increase of 83% in 2023, with net revenues rising 167.4% year-on-year to just under $1.7 billion. Net profit rose to $344 million. In comparison, Starbucks American coffee chain has 7,600 stores across China.
Citigroup, Morgan Stanley, Deutsche Bank and Investment Bank China International Capital Corporation are the leading underwriters of Czech’s IPOs.
CDH Investment Management, RWC Asset Management, Allianz Global Investors Asia Pacific and Orix Asia Asset Management have expressed a “non-binding” interest in purchasing 51.7% of the stock set for sale, the company said in its prospectus.
About 9% of China’s tea was exported to the US last year as exporters rushed to beat the expected taxes under Trump. China’s tea imports to the US are currently set to face tariff rates above 100%.
Dan Bolton, tea editor at Stir Coffee and Tea Magazine, said “serious (our) tea drinkers are seriously affected,” adding that the drink has historically been one of China’s “biggest ambassadors” and “paved the way for trade and negotiations.”
