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Tencent-Backed Mogu Prepares to Raise Up to $76 Million in a Downsized Offering

The online fashion community expects to price its shares at between $14 and $16 as it prepares to float its shares on the NYSE next week.

Anna Vodopyanova
    Nov 30, 2018 2:48 PM  PT
Tencent-Backed Mogu Prepares to Raise Up to $76 Million in a Downsized Offering

Mogu Inc., an online fashion platform backed by China's Tencent Holdings Ltd. (HKEX: 0700), is set to take on Wall Street next week in an initial public offering of up to $76 million.

In its amended prospectus today, the Hangzhou company said it was seeking to sell 4.75 million American depositary shares priced in the range of $14 to $16 apiece. It is expected to float on the New York Stock Exchange on Dec. 5.

Assuming the midpoint price of $15 per share, Mogu would receive $60.6 million from this offering. The underwriters on the deal, Morgan Stanley & Co. International, Credit Suisse Securities (USA) LLC, and China Renaissance Securities (Hong Kong) Ltd., may purchase an additional 712,500 ADSs in an over-allotment.

The IPO amount was a decline from $200 million which Mogu, previously known as Meili, targeted in a filing earlier this month. Furthermore, in July, the company aimed for an IPO of $500 million in a confidential filing, according to Caixin Global.

The company operates an interactive platform that helps its users immerse in fashion and purchase apparel from Mogu's merchants and brand partners. Its marketplace features content from fashion influencers, including live videos, photos, and articles on the latest trends, product reviews, and fashion tips, among other topics. Users access the platform primarily through its mobile app, Mogujie. In addition, the company taps into the massive user base of Tencent, China's gaming and tech giant, through its apps.

Mogu relies on China's growing population of surfers of the mobile web. It cited a report by Shanghai iResearch Consulting Co. Ltd., saying last year, on average, a young person spent 4.8 hours a day on mobile internet. Approximately 20 percent of that time was spent on shopping by females between the ages of 15 and 32, according to the report. Mogu's mobile platform, Mogujie, is a well-recognized platform in China among youth.

The company said it generates revenue from marketing, as well as commissions from the merchants on transactions facilitated through its platform. In today's filing, it said its gross merchandise volume (GMV) increased 25 percent in the six months through September compared with the same period last year.

From March to September, its revenue reached $71.3 million, up 2 percent year-over-year. Net loss during the six months decreased to $44.2 million from $62.3 million a year ago. For the year through March 2018, the company reported revenue of $141.7 million and a net loss of $81.3 million.

Hong Kong-listed Tencent holds an 18 percent stake in Mogu. Another large investor in the platform is Hillhouse MGJ Holdings Ltd., holding equity of 10 percent.

The fashion and lifestyle platform has applied to become public under the symbol "MOGU" in New York.