China's Keep raises $40m in Hong Kong IPO

The company sold approximately 10.8m shares for HKD 28.92 per share, according to a filing. This represents the bottom end of a pricing range that went as high as HKD 61.46. Based on the IPO price, Keep has a market capitalisation of around HKD 15.2bn (USD 1.9bn), short of the reported USD 2bn valuation for its most recent private funding round.

The stock reached as high as HKD 32 on the commencement of trading on July 12 and ended up closing at HKD 29. As of mid-morning on July 13, Keep was trading around the HKD 28.75 mark.

Keep was targeting a US listing and filed for a confidential review in the second quarter of 2021. The focus switched to Hong Kong because this was viewed as “a more appropriate listing venue for the company,” the prospectus states. However, the listing process has been protracted. Keep submitted a filing in February 2022, which expired at the end of August. A second filing was made last September.

Three cornerstone investors – strategic players with interests in smart health appliances, yoga sports equipment, and workout equipment – covered nearly one-quarter of the offering.

Keep raised approximately USD 650m in private funding across nine rounds, including extended rounds, between 2014 and 2021. The most recent was a USD 360m Series F in early 2021 led by Vision Fund 2. Hillhouse Capital, Coatue Management joined that round as new investors, while BAI Capital, GGV, Tencent Holdings, 5Y, and Jeneration Capital re-upped.

BW Ventures was the first investor in 2014, not long after Keep was founded, with BAI, GGV, and Ventech Capital also participating in early rounds. Other investors include Goldman Sachs.

Following the IPO, GGV is the largest external shareholder with 14.42%, followed by Vision Fund 2 with 9.28%, 5Y with 7.5%, Tencent with 6.24%, Jeneration with 5.62%, BAI with 5.33%, and Goldman with 4.63%. Wang Ning, Keep’s founder and CEO, owns 20.72%.

Keep claims to be China’s largest online fitness platform by monthly active users (MAUs) and workout sessions completed by users. It offers fitness content and artificial intelligence-assisted personalised training programs encompassing live-streaming classes and recorded courses. The company also sells smart fitness devices, equipment, clothing, and food.

In 2022, it recorded average MAUs of 36.4m who participated in 2.1bn workout sessions. As of December 2022, 3.3m MAUs were signed up to subscription packages – which offer access to customised premium content – and 524,000 had bought Keep fitness products. The company claims to be China’s largest yoga mat brand by gross merchandise value with an 18.3% market share.

Revenue reached CNY 2.21bn (USD 308.1m) in 2022, up from CNY 1.62bn a year earlier. Branded fitness products contributed 51.4%, with 40.4% coming from memberships and online paid content. The company’s net loss narrowed from CNY 2.9bn in 2022 to CNY 103.5m in 2022, largely due to changes in the value of convertible preferred shares issued to investors.

China Insights Industry Consultancy estimates that China has the world’s largest fitness population, which is set to grow from 374m in 2022 to 463.5m by 2026. Average spending by this group was CNY 2,518 per person in 2022, compared to CNY 16,425 in the US.

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• Topics
• Greater China
• IPO
• Consumer
• China
• Softbank
• GGV Capital
• 5Y capital
• BAI Capital
• Tencent
• Goldman Sachs
• IPO