Loha, a Chinese Fresh Food Retailer, Seeks $37.6 Million in Fresh Capital
The Shenzhen-based company aspires to become China’s reliable modern retailer in fresh food that the country currently lacks.
Loha Co. Ltd., a Chinese fresh produce retailer, has applied to raise $37.6 million in a New York public offering.
The company, based in Shenzhen, positions itself as a tech-driven distributor and smart retailer of fresh and healthy products in China. Specifically, Loha mainly sells imported fruits, wild-harvested seafood, vegetables, eggs and dry goods through traditional stores, as well as smart vending machines. It has 102 overseas and 5 domestic suppliers in 16 countries, according to its amended prospectus filed on Monday.
Loha's vending machines can be used through a WeChat mini-program, Lohas City.
For the year ended September 2018, Loha gained $85.19 million in revenue, up 49% from the fiscal year 2017, according to its filing with the U.S. Securities and Exchange Commission. Net income rose 71% year-over-year to $8.78 million in the fiscal year 2018, Loha said.
For the half-year through March 2019, the retailer reported revenue of $44.92 million, at an increase of 43% year-over-year. Net income in the six months declined nearly 15% from a year ago to $2.65 million, which Loha attributed to risen prices on imported fruits.
Loha relies on the growing population of China's middle class that increasingly invests in the health and well-being of their families and grows increasingly aware of the sustainability issue. Its growth strategies include further penetration of the existing markets and global expansion, among others.
Citing research by Qianzhan Industry Research Institute, Loha said that China's fresh food e-commerce market in 2019 is expected to reach 256.5 billion yuan, up 32% from 2018. The company also said it aspires to become China's reliable modern retailer in fresh food that it currently does not have.
Loha's operations are conducted under Lohas Agricultural, established in 2013, and Lohas Supply Chain, founded in 2014, according to the company filings.
The company said it intends to use 20% of the proceeds of its IPO to enhance and expand its business, 45% for marketing and brand promotion and 35% for general corporate purposes.
Maxim Group LLC is underwriting Loha's IPO.
The company has applied to trade its Class A ordinary shares under the ticker symbol "LOHA" on the Nasdaq Capital Market.