VC-backed Jumei gains 10% on trading debut after $245m IPO

The company's shares opened at $27.25 and peaked at $28.28 before slipping back to close at $24.18. Jumei earlier sold 11.14 million American Depository Shares at $22 apiece, and then granted underwriters the option to purchase an additional 1.67 million shares at the same price. A further $150 million is expected from a concurrent private placement to General Atlantic.

Jumei set an initial pricing range of $19.50-21.50 and planned to sell 9.5 million shares, pre-overallotment option, putting it on course to raise a more modest sum of up to $204 million.

The company's existing investors include Sequoia Capital and K2 Partners, a private equity firm co-founded by Keyi Chen and China Renaissance Partners in 2010. They did not sell any shares in the IPO but their stakes have been diluted to 16.5% and 9.1%, respectively.

The company launched Junmei.com in 2010 and it had a 22.1% share of China's online beauty products market in 2013, based on analysis by Frost & Sullivan. Jumei also introduced a mobile platform, which has grown significantly, generating approximately 49% of the company's gross merchandise volume in the first quarter of 2014.

Jumei offers a combination of an online shopping mall, curated sales - selecting and recommending a collection of branded beauty products that are available for set periods of time - and deep-discount, limited availability flash sales. It works with around 1,700 suppliers and third-party merchants and had approximately 10.5 million active customers in 2013, up from 1.3 million two years earlier.

The company posted a net income of $25million in 2013, up from $8.1 million the previous year. Revenues jumped from $223.2 million in 2012 to $482.9 million in 2013.

According to a regulatory filing, Sequoia invested $4 million in the company through promissory notes in November 2010 and February 2011. These notes were fully discharged on completion of Jumei's Series A round in April 2011, which saw Sequoia, K2 and other investors commit $7.2 million. The Series B round came in November 2011 when Ventech China II SICAR and a Hong Kong investment company called Moon Wan Sun put in $6 million.

Sequoia is also an investor in Vipshop, which went public in 2012. Earlier this year, the company bought domestic cosmetics and fashion products site Lefeng for $132.5 million. The acquisition was said to be an attempt to broaden Vipshop's product offering. While the company is strong on flash sales for apparel, it has less experience in cosmetics and struggles to compete against Jumei.

Online sales of beauty products in China reached RMB22.6 billion ($3.7 billion) in 2013, up from RMB1.7 billion in 2010. They are expected to reach RMB94.6 billion in 2018, accounting for 21.9% of total retail sales of beauty products, compared to 10.2% last year.

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• Topics
• Venture
• Exits
• Consumer
• Technology
• Greater China
• TMT
• China
• Consumer
• IPO
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• Sequoia Capital
• General Atlantic
• Venture