Chinese cosmetic surgery marketplace files for US IPO

The company, established in 2013, has been dubbed the Facebook of plastic surgery in China. Its business comprises three segments: an information portal that provides specialist coverage of medical aesthetics; a social network through which users can share their experiences; and a surgical consultation and booking service. Procedures are listed much like products on an e-commerce site, with prices for surgery on different body parts and details of the doctor who would perform it.

China’s medical aesthetics industry was worth RMB121.7 billion ($17.7 billion) last year. Frost & Sullivan projects revenues will reach RMB360.1 billion by 2023. It estimates there are around 10,000 service providers, with the top five representing a combined market share of just 7.4%. Online marketing by these companies is expected to rise from RMB18.1 billion in 2018 to RMB49.3 billion in 2023.

Online specialist platforms compete with mainstream search engines and e-commerce sites for this marketing spend. There has already been a round of consolidation among the platforms, with the number of recognized industry participants shrinking from around 30 to half a dozen. So-Young’s major rivals are said to include Gengmei and Meitu.

The company claims to be the market leader, with its mobile app accounting for 84.1% of total daily user time spent on online medical aesthetic service apps in 2018, according to Frost & Sullivan. It also facilitated treatment transactions worth RMB2.1 billion in 2018, one-third of total online bookings for the industry last year. Meanwhile, there were over 240 million average monthly views in the fourth quarter of 2018. The company works with 5,600 clinics and other service providers.

Most of So-Young’s revenue comes from information listing fees and reservation service fees charged to medical aesthetic service providers. It generated RMB617.2 million in 2018, up from RMB259.3 million the previous year. Over the same period, net income rose from RMB17.2 million to RMB55.1 million. So-Young was loss-making as recently as 2016.

Matrix first backed the company in 2014 and re-upped later the same year, committing $20 million in conjunction with Trustbridge Partners. They are now the two largest external stakeholders with 21.7% and 17.5%, respectively. Tencent Holdings is said to have invested $50 million in 2016, but it does not appear on the register of largest shareholders.

Apax Partners owns 10.8%, having led a $60 million Series D round in early 2018. It participated through Apax Digital Fund, a vehicle that focuses on high-growth enterprise technology and internet companies globally. Matrix, CDH Investments, and Trustbridge also took part in that round.

Last September, Orchid led a Series E worth $70 million, with additional commitments from Matrix, BOC International, and RCIF. The latter is backed by the Russian Direct Investment Fund and China Investment Corporation (CIC), each of which committed $2 billion in seed funding in 2012. Orchid holds a 9.3% interest in So-Young.

The prospectus filed by the company is preliminary; the size and pricing of the offering have yet to be determined.

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• Topics
• Greater China
• IPO
• Technology
• Consumer
• China
• TMT
• Matrix Partners
• Apax Partners
• Orchid Asia Group Management
• Trustbridge
• Tencent