HONG KONG (Reuters/IFR) - China’s leading online parenting firm Babytree Group, backed by e-commerce giant Alibaba Group (BABA.N), plans to raise up to $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 (0656.HK) among its backers, is looking to raise $800 million to $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 $3 billion-$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 $4 billion deal from online food delivery-to-ticketing services platform Meituan Dianping and a $1 billion listing of popular hotpot chain Haidilao.
Escalating Sino-U.S. 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 .HIS down 19 percent from its January peak.
Four recent major listings of Chinese firms in the city -smartphone maker Xiaomi Corp (1810.HK), mobile telecoms tower operator China Tower (0788.HK) as well as biotech firms Ascletis Pharma (1672.HK) and BeiGene (6160.HK) 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 $214 million in Babytree, valuing the 11-year-old firm at 14 billion yuan ($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 ($106 million) in 2017, primarily from advertising and e-commerce businesses, up 43 percent 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.
($1 = 6.8916 Chinese yuan)
Reporting by Julie Zhu, and Fiona Lau of IFR; Editing by Himani Sarkar