Alibaba-backed Ruhnn Files to Raise $200 Million in New York IPO
The Hangzhou-based company, which facilitates the activities of "key opinion leaders," is seeking to trade on the Nasdaq Global Market under the symbol "RUHN."
China's largest key opinion leader (KOL) facilitator, Ruhnn Holding Ltd., is eyeing a $200 million initial public offering in New York
Based in Hangzhou, Ruhnn creates networks on social media for influencers in fashion, culture, entertainment, and gaming to connect them with fans and businesses in brands, retailers, designers, manufacturers, and suppliers.
In its preliminary prospectus filed Wednesday, Ruhnn cited research by Frost & Sullivan saying the company has been the largest of its kind in China in terms of revenue and the largest in e-commerce in terms of gross merchandise volume (GMV). As of Dec. 31, it had 113 signed key opinion leaders (KOLs) with a total of 148.4 million fans across major social media platforms in China. Among its partners, Ruhnn had 501 brands and 28 third-party online stores for promotion, according to the filing.
"We pioneered the commercialization of KOL ecosystem through a full-service model whereby we integrate key steps of the e-commerce value chain, from product design and sourcing and online store operation to logistics and after sales services," Ruhnn stated.
The company generates revenue from the online sales and promotion of self-designed branded products to the fans of the KOLs. It also said it provides training to KOLs to help "develop distinctive characters" and "enhance popularity." Ruhnn said it takes pride in the diversity of the KOLs it supports.
For the fiscal year ended March 31, 2018, the company reported revenue from product sales of $132.7 million, up 59 percent year-over-year. For the first nine months of fiscal year 2019, its revenue was $109.9 million, at a 4 percent rise. Revenue from services quintupled to $5.1 million in fiscal 2018 and has more than tripled to $14.6 million in the nine months through December. It had a net loss of $13.1 million in the fiscal year 2018 and $8.4 million in the first three quarters of fiscal 2019.
Ruhnn said China's social e-commerce had a GMV of 609.9 billion yuan in 2017 and is expected to grow at a compound annual growth rate (CAGR) of 36 percent to 2,782.6 billion yuan in 2022.
Ruhnn has some ties with China's biggest e-commerce company, Alibaba Group Holding Ltd. (NYSE: BABA). Alibaba's retail platform, Taobao China Holding ltd., holds a stake of 8.56 percent in Ruhnn, while one of its directors, Pen Hung Tung, serves as Alibaba's chief marketing officer.
The funds from the IPO will be used for the pursuit of additional monetization channels and strategic investments, identifying and training KOLs, technology, and general corporate purposes, according to the prospectus.
Underwriting the offering are Citigroup Global Markets Inc. and UBS Securities LLC.
The company seeks to trade on the Nasdaq Global Market under the symbol "RUHN."