Monday, May 10, 2021

Chinese vaping group RLX doubles in value on Wall Street debut

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China’s largest e-cigarette maker doubled in value on Friday when it debuted on Wall Street, as investors seek exposure to what is potentially the world’s largest vaping market.

RLX Technology’s IPO on the New York Stock Exchange, founded in 2018, is the first major U.S. listing by a Chinese company this year. It is also the latest sign that tensions between Washington and Beijing have not dampened the appetite of Chinese groups for American capital.

The IPO priced at $ 12 a share, above its traded range, and the shares jumped to $ 25 in afternoon trading. RLX raised $ 1.4 billion through the offer.

This month, NYSE removed three Chinese state-owned telecommunications groups that have been blacklisted by an executive order from the Trump administration for their alleged links to the Chinese military.

RLX, which is backed by venture capital firm Sequoia Capital, has benefited from a vaping boom in China. The country holds huge potential for e-cigarette makers, with around 286.7 million adult smokers in 2019, according to the company’s IPO prospectus. The industry has grown despite China’s publication of a effective ban on e-cigarette online sales in 2019 amid global concerns about health risks and addiction. RLX controls around 63% of the Chinese electronic cigarette market, according to the prospectus.

One person working on the list noted that although environmental, social and governance concerns The health risks and regulatory crackdowns may have made some European investors think, “you couldn’t turn away” buyers from Asia, who flocked to the fast-growing sector of the world’s second-largest economy.

Chinese ads in the United States jumped over the past year despite geopolitical tensions between Beijing and Washington. Chinese IPOs raised nearly $ 15 billion on U.S. stock exchanges in 2020, the second highest on record, according to Bloomberg data.

However, Congress passed legislation in December, it would force Chinese companies to withdraw from US stock exchanges unless they comply with US accounting rules. This could limit the access of Chinese groups to US financial markets in the future.

The IPO was led by Citigroup and China Renaissance. RLX did not immediately respond to a request for comment.

Additional reporting by Qianer Liu in Shenzhen

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