VC-backed Chinese scooter maker targets $104m in US IPO

The company will offer 8.3 million American Depositary Shares (ADS) for $10.50-12.50 apiece. GGV has indicated an intention to invest $10 million in the offering. At the midpoint of the proposed range, Niu would have a fully diluted market value of $899 million, according to a prospectus.

GGV is expected to hold a 10% stake after the offering, while Future Capital Discovery Fund would have 4.6%. The largest external shareholder is a trust of which Yinan Li, Niu’s founder, is the beneficiary. A former Huawei executive, Li was convicted of insider trading by a Chinese court in January 2017 and released from prison last December. Li no longer has an official position with Niu and the company claims he has no operational involvement.

Three members of Niu’s management team, including CEO Yan Li, will hold 13.7% of the equity post-offering but the dual-class share structure gives them a disproportionately large voting power – though not a controlling interest.

Founded in 2015, the company claims to be the market leader among lithium-ion battery-powered e-scooter manufacturers in China, with a 26% share in terms of sales volume. As of June 2018, it had sold more than 431,500 scooters in China, Europe and other countries. It claims to rank third in Europe by sales volume, with an 11.1% market share.

Products are sold through offline and online channels. The offline component includes a network of 205 partners with 571 franchised stores across 150 cities in China and 18 distributors in 23 countries overseas. The company also seeks to position itself as a lifestyle brand for urban mobility in China, operating an app that has more than 457,000 registered users. The app synchronizes with Niu scooters, generating user data for monitoring, diagnostic and product development purposes.

Most of the company’s revenue comes from scooter sales, with vehicle maintenance services and spare part sales accounting for the rest. Revenue reached RMB769.4 million ($116.2 million) in 2017, up from RMB354.8 million a year earlier. Over the same period, the net loss narrowed from RMB232.7 million to RMB184.7 million. For the first six months of 2018, Niu posted revenue of RMB557.1 million and a net loss of RMB314.9 million.

Around one-third of the IPO proceeds will be used to upgrade and expand the company’s manufacturing facilities, while the rest will go towards R&D and developing distribution networks.

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• Topics
• Greater China
• IPO
• Industrials
• Consumer
• Cleantech
• China
• GGV Capital
• Transportation
• manufacturing