VC-backed Ruhan drops on debut after $125m US IPO

The company – officially known as Ruhnn Holdings – sold 10 million American Depository Shares (ADS) at $12.50 apiece, according to a filing. The stock ended April 3 at $7.85 and then staged a modest rebound over the following day. It closed at $8.51 on April 5.

Hangzhou-based Ruhan claims to be China's largest internet key opinion leader (KOL) facilitator, helping individuals build and monetize a social media following. These KOLs engage followers in specific fields, such as fashion, culture, entertainment, and gaming. They live-stream their daily activities and charge fees to brands and online retailers for promoting their products.

In addition, Ruhan offers a full-service model that covers everything from product design and sourcing to distribution and after-sales service. It builds brands based on each KOL's distinctive character and then launches third-party online stores in their name.

The company had 113 KOLs with an aggregate of 148.4 million fans across major social media platforms by the end of 2018. It cooperated with 501 brands and 28 online retailers. These KOLs facilitated transactions worth RMB2 billion ($298 million) in gross merchandise value (GMV), up from RMB1.2 billion a year earlier. Three KOLs are each responsible for more than RMB100 million in GMV. One of them, Dayi Zhang, accounts for about half of the overall GMV.

Most fans are young females who identify themselves as fashion pursuers and frequent online shoppers. Sina's Weibo platform is the primary means of engagement, followed by Alibaba Group's Weitao and Tencent Holdings' WeChat.

Revenue came to RMB912.5 million for the 12 months ended March 2018, up from RMB572.4 million a year earlier. It incurred net losses of RMB40.1 million and RMB90 million for the two periods due to high costs for product sales and promotions. For the nine months ended in December 2018, the company generated RMB755.9 million in revenue and posted a loss of RMB57.5 million.

Ruhan was established in 2016 by three founders and several institutional investors. It listed on China's National Equities Exchange & Quotation (NEEQ), or New Third Board, the same year but withdrew in 2018. The three founders together hold 44.4% of the equity and 88.6% of the voting power. Zhang has an equity interest of 13.2%.

An unidentified number of pre-IPO investors owned 34.47% prior to the listing, none of which had more than 10%. Two are identified in the prospectus: SAIF Partners and Alibaba's Taobao unit, the controller of Weitao. Each has 7.5%. Other investors are said to include Qiming Venture Partners and Legend Capital.

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• Topics
• Greater China
• IPO
• Technology
• China
• TMT
• Alibaba Group
• SAIF Partners
• Qiming Venture Partners
• Legend Capital
• Exit