Chinese Tea Chain Chagee Valued at $6.2 Billion as Shares Pop in Nasdaq Debut

Chinese tea company Chagee achieved a valuation of $6.2 billion following a 21 per cent rise in its shares during their Nasdaq launch on Thursday, overcoming market fluctuations caused by the trade war between the United States and Beijing. The American depositary shares of the company started at $33.75 each, in contrast to the IPO price of $28. Chagee sold 14.7 million ADS at the upper end of its marketed range of $26 to $28 per share, raising $411 million, marking the largest listing for a Chinese consumer firm since RLX Technology's $1.4 billion IPO in January 2021, as per Dealogic data.

The market response highlights ongoing investor trust in Beijing's commitments to enhance domestic consumption and support capital markets, even as confidence declines among businesses and consumers due to a full-scale economic conflict between the two largest global economies. According to IPOX CEO Josef Schuster, numerous recent IPOs associated with Chinese capitalise on the expansion of Chinese consumer spending and are thus, in our view, fairly shielded from disruptions related to tariffs. Chinese bubble tea companies Mixue and Guming launched their public offerings in Hong Kong earlier this year.

Chagee Soars in Nasdaq Debut

Established in 2017 by Junjie Zhang, Chagee boasted almost 6,700 teahouses globally by the end of March, primarily situated in high-end shopping centres throughout China as part of a franchise model. The firm brought in 29.5 billion yuan ($4.03 billion) in revenue last year. Four key investors, such as CDH Investment Management and fund manager Redwheel have expressed their intention to purchase $205 million worth of ADSs offered in the IPO. Redwheel is among the largest investors in the British retailer Marks & Spencer. Zhang will maintain ownership of almost 54 per cent of the Class B shares in the company, which have 10 votes each, resulting in 89 per cent of the overall voting power.

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According to Dealogic data, the capital raised by Chinese firms on U.S. exchanges has plummeted 91 per cent from 2021 to $1.39 billion in 2024, following the delisting of shares by Chinese ride-hailing giant Didi Global due to pressure from Chinese regulators. In an interview with Fox Business Network last week, Treasury Secretary Scott Bessent did not dismiss the possibility of delisting Chinese stocks from U.S. exchanges, stating that every option was considered. According to Matt Kennedy, a senior strategist at Renaissance Capital, a firm specialising in IPO-focused research and ETFs, U.S. investors could have as much as 40 per cent of their equities in foreign companies. China will represent a significant portion of that.