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Yatsen Holding revives China IPO sentiment

(ATF) Shares of Yatsen Holding, the parent company of China-based beauty ‘unicorn’ Perfect Diary, jumped 66% in their US market debut on November 19, adding to a host of blockbuster initial public offerings (IPOs) this year.

The successful listing helped to allay concerns about IPOs for Chinese companies in the US, which are facing increased scrutiny from regulators.

The firm’s shares opened at $17.51 per American depositary share (ADS), well above the IPO price of $10.50 per ADS.

Earlier in the session, Yatsen had priced its offering of 58.75 million ADSs on the New York Stock Exchange at the top-end of its range of $8.50 to $10.50 per ADS, raising $617 million.

Founded in 2016, Yatsen has launched three fast-growing cosmetics and skincare brands – Perfect Diary, Little Ondine, and Abby’s Choice.

Using chat groups, video streams and low prices for foundation, Perfect Diary emerged out of nowhere four years ago to become a cosmetics giant for the digital age, trailing only L’Oreal and LVMH in China – the world’s number two market for make-up.

Yatsen had more than 200 stores across China at the end of September, an increase from 40 stores at the end of 2019.

“The core focus is still the domestic market in the next three to five years to expand,” said Yatsen CEO Huang Jinfeng, according to a Reuters report.

“We will fund research and development, manufacturing, and are looking to open 600 to 1,000 stores.”

Yatsen is backed by Hillhouse Capital, Sequoia Capital, Tiger Global Management, Boyu Capital and Chinese Culture Group.

Yatsen’s IPO comes at a time when US-listed Chinese companies are facing tightened scrutiny and strict audit requirements from American regulators.

Sentiment toward Chinese firms among US investors has also been hit by the fallout from Luckin Coffee’s listing. The coffee chain, which was listed on the Nasdaq, earlier this year disclosed that some key employees fabricated sales accounts.

Goldman Sachs, Morgan Stanley and CICC were the lead underwriters of Yatsen’s IPO on Thursday.


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Jon Macaskill

Jon Macaskill has over 25 years experience covering financial markets from New York and London. He won the State Street press award for 'Best Editorial Comment' in 2016


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