Tencent-backed Fashion Tech Startup Mogu to Float on New York Stock Exchange Tomorrow

Mogu is expected to raise about $67 million in a U.S. initial public offering priced at the bottom of its anticipated range, sources told Bloomberg.

Shirley Tian
    Dec 05, 2018 6:02 PM  PT
Tencent-backed Fashion Tech Startup Mogu to Float on New York Stock Exchange Tomorrow
author: Shirley Tian   

Mogu Inc., an online fashion platform backed by China's Tencent Holdings Ltd. (HKEX: 0700), is scheduled to float on the New York Stock Exchange under the symbol "MOGU" tomorrow.

While the Hangzhou-based company said in a recent regulatory filing that it was seeking to sell 4.75 million American depositary shares priced in the range of $14 to $16 apiece, Mogu was expected to raise about $67 million by pricing its shares at the bottom of the range, sources told Bloomberg.

The IPO was already a big 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.

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

Mogu operates an online platformthat offers 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 its recent 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. The company's 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.

The IPO was originally scheduled for Wednesday but was postponed to Thursday as the U.S. stock markets were closed today for the memorial services of former President George H. W. Bush.