Chinese retailer KK Group files for Hong Kong IPO

Electronic World Trade Platform (eWTP) Ecosystem Fund, a vehicle launched with support from Alibaba Group and Ant Group, is the largest external investor with 9.9%. It led KK Group’s Series C and D rounds of CNY 400m (USD 59m) and CNY 1bn, respectively, both of which closed in 2019.

Matrix Partners China, which led a CNY 70m Series B in 2018 and re-upped in several subsequent rounds, owns 7.5%, CMC Capital, the lead investor in a CNY 1bn round in mid-2020, has 6.8%, while Hongtai Aplus and Ince Capital Partners have 4% and 1.5%. Shenzhen Capital Group, Lighthouse Capital, Harvest Investments, N5 Capital, and Redview Capital are also listed as investors in the prospectus.

Founded in 2014, KK Group sells good ranging from snacks to baby care products. It claims to be one of China’s top three speciality retailers of lifestyle products by gross merchandise value (GMV) in 2022. An online marketplace is supported by 696 offline stores across 193 cities in China and 22 cities in Indonesia. Almost all these outlets are directly owned.

The company was known as KK Guan until 2019 when two new retail lines were introduced. There are now four main brands: KK Guan, a lifestyle minimart business; KKV, an integrated lifestyle retailer aimed at teenagers and young adults; The Colorist, which focuses on cosmetics; and X11, a pop culture retailer. KKV and The Colorist are the largest by store numbers, with 402 and 198 apiece.

Revenue amounted to CNY 3.55bn in 2022, up from CNY 3.52bn the previous year. Over the same period, KK Group swung from a loss of CNY 5.68bn to a net profit of CNY 61.9m, largely due to changes in the value of shares issued to third parties. In EBITDA terms, the company’s loss widened from CNY 303.9m in 2021 to CNY 412.3m in 2022.

KK Group claims to be on the path to profitability, driven by expansion in the lifestyle products speciality retail market – Frost & Sullivan estimates it will be worth CNY 526bn in 2027, up from CNY 224.4bn in 2022 – an anticipated post-pandemic rebound, and efforts to deliver cost efficiencies at the store level. EBITDA for the first three months of 2023 was CNY 85.9m

KK Group has raised 12 rounds of funding, including extensions to formal rounds, the prospectus states. The company was restructured offshore in early 2019, but there were still three tranches of onshore Series D funding, amounting to CNY 368m later in the year.

CMC was the largest investor in a USD 89m Series E in 2020, which was accompanied by a CNY 90m onshore fundraise. In 2021, the company closed a Series F of USD 200m followed by two extensions of USD 73m and USD 20m.

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• Topics
• Greater China
• Technology
• Consumer
• IPO
• China
• TMT
• Matrix Partners
• CMC Capital
• Ince Capital Partners
• Hongtai Aplus
• Harvest Capital
• Shenzhen Capital Group
• Redview Capital