MOGU Inc. | Tencent-Backed Online Fashion Startup Seeking To Raise $1.7 Billion In U.S. IPO

Mogu Inc

Mogu Inc, an online fashion and cosmetics seller based in Hangzhou, China, is planning to go public on the New York Stock Exchange (NYSE). Shares of the company are expected to begin trading during the week of December 3, 2018 under $MOGU ticker symbol.

An amended registration statement filed with the U.S. Securities and Exchange Commission (SEC) shows the company will offer 4,750,000 million American depositary shares, or ADS. Each ADS represents 25 of Mogu’s Class A ordinary shares, par value $0.00001 per share. The initial public offering price per ADS will be between $14 and $16.

Mogu would command a fully diluted market value of $1.7 billion at a price of $15 per share. Morgan Stanley & Co. International, China Renaissance Securities (Hong Kong) Ltd, and Credit Suisse Securities (USA) LLC are underwriting the IPO.

Mogu customers access its marketplace mainly via its Mogujie mobile app. The company also benefits from the large customer base of Chinese tech and gaming giant Tencent, via its apps. Mogu marketplace offers content from fashion influencers, including latest trend articles, fashion tips, product reviews, live videos, photos, etc.

The company generates revenue from marketing, and commissions from the merchants who facilitate transactions via its platform. According to its filing, the company generated yuan 16.3 billion, or $2.3 billion in transactions, and boasted 62.6 million mobile monthly active users in the fiscal year to September.

From March to September, total revenue grew 2% from the same period a year ago to $71.3 million, while net loss during the six months came to $81.3 million, compared with $142 million a year earlier.

Hong Kong-based Tencent, which has been aggressively increasing its presence in the e-commerce industry, owns stake of 18% Mogu. The conglomerate also holds a stake of 20% in Chinese second-largest online retailer, Inc.

In 2017, JD and Tencent invested in New York-listed fashion marketplace, Vipshop Holdings Ltd. Hillhouse MGJ Holdings Ltd., a subsidiary of investment management firm Hillhouse Capital Group that is based in Asia, also owns a stake of 10% in Mogu.

Mogu was founded seven years ago as online place for China’s young generation to engage and have fun while sharing and discovering the newest fashion trends. The company believes young people will continue increasing the amount of time they spend on mobile devices for entertainment, social interaction, information, and shopping.

“Young people in China have grown up using mobile internet for their social interaction, shopping, information sharing and entertainment, among others. According to iResearch Report, there are 414 million young people born between 1985 and 2009 in China. They spent an average of 4.8 hours a day on mobile internet in 2017 and this figure is expected to increase. Young females, in particular, are generally passionate about the latest fashion and beauty trends and used to online shopping,” its prospectus reads.

Mogu is under the leadership of Chairman and Chief Executive Chen Qi. The CEO was also a Product Manager at Alibaba-owned, an online shopping company based in China.