Tencent, Hillhouse-backed Chinese Discount Retailer Miniso Files For US IPO

Miniso Group Holding, a Chinese discount retailer selling branded lifestyle and home goods, on Thursday filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC).

Miniso Group, backed by Tencent and Asia-focused private equity giant Hillhouse Capital, filed to raise $100 million in the offering, which is likely a placeholder amount for a deal that could reach up to $1 billion, according to SEC-registered investment adviser Renaissance Capital.

Guangzhou-based Miniso offers design-led lifestyle products with heavy Japanese influences, such as home decor, small electronics, textile, accessories, beauty tools, cosmetics, personal care, and stationery, through its flagship retail brand “MINISO.”

The Chinese operator of discount retail shops is cashing in on the country’s retail industry, which has experienced fast growth over the past three decades driven by robust economic growth and rising disposable income.

According to the National Bureau of Statistics of China, the annual per capita disposable income for all households in China grew from 22,000 yuan ($3,222) in 2015 to 30,700 yuan ($4,496) in 2019, representing a compound annual growth rate of (CAGR) of 8.8 per cent.

China’s retail market size reached 41.2 trillion yuan ($6.0 trillion) in 2019 and is estimated to continue to grow at a CAGR of 6.0 per cent from 2020 to 2024.

Since it opened the first store in China in 2013, Miniso has built a store network of over 4,200 MINISO shops as of June 30, 2020, of which the firm directly operates 129. The number includes about 2,500 stores in China and over 1,680 stores across more than 80 countries and regions like the US, Brazil, the United Arab Emirates, Russia, Thailand and the Philippines.

The firm recorded about 416 million visits to the MINISO stores in H1 2020, 60 per cent of which were aged below 30. To retain its attractiveness to the younger generation, it has forged collaborations with 17 IP licensors who owns brands including Marvel, Disney, Hello Kitty and Sesame Street.

Miniso’s revenue reached 9.0 billion yuan ($1.3 billion) in the fiscal year ended June 30, 2020. Its aggregate gross merchandise value (GMV) of products sold through its network reached 19.0 billion yuan ($2.7 billion) in 2019, making it the largest global branded variety retailer of lifestyle products, according to the Frost & Sullivan Report cited in its prospectus.

Tencent and Hillhouse Capital each hold a 5.4 per cent stake in Miniso, while the company founder, chairman and CEO Ye Guofu owns an 80.8 per cent stake.

The firm intends to use proceeds from the IPO offering to expand its store network, invest in warehouse and logistics facilities, as well as technologies and information systems.

The rest of the capital will finance general corporate purposes, which may include investing in sales and marketing activities, expanding and upgrading office space and facilities by acquiring land to build an office building, and potential strategic investments and acquisitions.

Miniso is expected to float shares under the symbol “MNSO” on the New York Stock Exchange (NYSE). Goldman Sachs and BofA Securities are the joint bookrunners on the deal.