(Yicai) Feb. 26 -- Mixue Group’s initial public offering was oversubscribed by more than 5,125 times, with margin loans taken out by individual investors reaching HKD1.77 trillion (USD227.7 billion), setting a new record for the Hong Kong stock market, Securities Times reported.

Apart from Mixue’s leading position in China’s crowded modern tea sector, the reforms to Hong Kong's IPO system rolled out in November 2023 have contributed to the offering’s enthusiastic reception.

The new Fast Interface for New Issuance system shortens the waiting time between applying to buy shares and the stock’s listing. Additionally, once subscriptions reach a certain level, investors are only required to pay a portion of the total amount due. Previously, an investor’s funds could be locked up for as long as two weeks, and those who borrowed funds had to pay interest regardless of whether their bids were successful.

As a result, many Hong Kong brokers are offering zero-interest rate new share subscriptions. For regular companies going public, brokerages can offer leverage of up to 10 times the amount paid and for sought-after companies, this can go up as high as 20 times. In the case of Mixue, a number of securities firms were offering leverage of 100 times or more.

Futu Securities was the brokerage which subscribed for the most Mixue shares at HKD1.06 trillion (USD136.4 billion), accounting for 59 percent of the total on offer. It was followed by Philip Securities, at HKD306 billion (USD39.3 billion) or 17 percent. Other brokers such as Prudential Securities and Tiger Brokers also signed up for more than HKD100 billion (USD12.8 billion) each.

Zhengzhou-based Mixue was the largest ready-made beverage company in the world as of Dec. 31, with 46,479 stores across 11 countries. By comparison, Starbucks had about 38,000 outlets and McDonald's around 42,000. In the first nine months of last year, Mixue had net profit of CNY3.5 billion (USD482.2 million), well ahead of competitors such as Naixue, Dreamiya and Guming.

Mixue plans to issue 17.06 million new shares, or 4.52 percent of its total share capital, for HKD202.50 (USD26) apiece, with the aim of raising HKD3.4 billion (USD445.2 million), which would give it a market valuation of about HKD76.3 billion (USD9.8 billion).

About two-thirds of the proceeds will be used to expand Mixue’s global footprint, it said. Twelve percent will go toward building its brand and intellectual property and another 12 percent is earmarked to strengthen its digital and smart capabilities across the business. The rest will be used to supplement working capital and for other general business purposes.

Editor: Kim Taylor