Chinese vaping firm RLX Technology seeks up to $1.2b in US offering

Chinese e-cigarette maker RLX Technology Inc. is looking to raise as much as $1.17 billion from a U.S. initial public offering, highlighting how American stock exchanges remain attractive fund-raising avenues for mainland firms despite heated tensions between the world’s two biggest economies.

RLX Technology, backed by Sequoia Capital China, is selling 116.5 million American Depositary Shares at $8 to $10 each, according to a U.S. filing. Each ADS represents one ordinary share and will be listed on the New York Stock Exchange.

The Chinese company, known for its RELX-branded devices in China, had earlier considered Hong Kong as a listing venue, but it ultimately opted for the U.S.

Tensions between Beijing and Washington have ratcheted up in the past few weeks as the New York Stock Exchange moved to delist three Chinese telecommunications firms following two earlier U-turns where the bourse flip-flopped between removing and keeping the shares.

Adding to the headwinds for Chinese companies looking to go public in the U.S. is a law that could lead to them being kicked off U.S. exchanges if American regulators can’t vet their audit papers.

Still, deteriorating U.S.-China relations last year appeared to have no discernible effect on Chinese companies’ thirst for U.S. capital.

Almost $15 billion was raised by Chinese IPOs on U.S. exchanges in 2020, the second-most on record, according to data compiled by Bloomberg. U.S. exchanges are more welcoming of loss-making companies than either Hong Kong or Chinese bourses, as well as having a more streamlined listing process.

RLX, founded in 2018, is China’s largest e-cigarette maker. The vaping industry has boomed in China even as the country banned online sales of e-cigarettes just over a year ago. China has joined other countries globally in putting pressure on vaping amid concerns about its potential health effects.

China is the world’s largest potential vaping market, with an estimated 286.7 million adult smokers in 2019, RLX said in its prospectus. But vaping products only have a 1.2% penetration rate, compared with 32.4% in the U.S.

RLX’s revenues increased to 2.2 billion yuan ($340 million) in the first nine months of 2020 from 1.14 billion yuan a year earlier. It started turning a profit in 2019 and recorded net income of 109 million yuan in the nine months to Sept. 2020.

The company plans to price the IPO on Jan. 20 after the U.S. market closes, according to a term sheet. Citigroup Inc. and China Renaissance are joint bookrunners for the offering.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.