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Tencent-Backed Fashion Retailer Mogu Ends Trading Debut Flat

Michael Hytha and Selina Wang

(Bloomberg) -- Mogu Inc., the fashion-and-cosmetics online retailer backed by Tencent Holdings Ltd., ended its first day of trading unchanged from its U.S. initial public offering.

The Chinese company’s American depositary shares opened at $12 in trading in New York Thursday, well below the $14 IPO price that was at the bottom of the $14 to $16 marketed range. Mogu sold 4.75 million shares on Tuesday to raise $67 million. The shares closed at $14, giving the company a market value of about $1.3 billion.

Mogu was targeting a market value of $4 billion earlier this year before a sell-off hit demand for tech stocks and forced it to cut that goal in half, people familiar with the matter said last month. Mogu was valued at $3 billion when it was created in 2016 through the merger of Meilishuo and Mogujie.

The IPO marked the latest in a string of debuts this year by companies backed or controlled by Tencent, including Hong Kong-traded internet services giant Meituan Dianping and New York-listed electric vehicle maker NIO Inc. On Monday, Tencent’s music-streaming arm said it will market its U.S. IPO shares at $13 to $15 each, which would raise as much as $1.23 billion when it prices its shares on Tuesday.

Shares of the 38 China-based companies that have raised a combined total of $8.6 billion in U.S. IPOs this year are up 6.5 percent on average, according to data compiled by Bloomberg. That compares with 172 U.S. listings raising $40 billion for companies based elsewhere. Shares of those companies are up an average of 8.5 percent, the data shows.

‘Hard to Time’

Trade tensions between the Trump administration and China didn’t have a bearing on Mogu’s debut because it’s focused on its domestic market, Helen Wu, the company’s chief financial officer, said in an interview. While it was “hard to time” the entry into capital markets, the listing is part of a long-term strategic plan, she said.

“Getting listed on the New York Stock Exchange will help build our brand, and in the fashion industry, brand is very important,” Wu said. “The tech market is hard to predict.”

Mogu, which targets China’s millennial and Generation Z shoppers, had an average of 62.6 million monthly average users on its mobile platform during the year ended Sept. 30, according to a regulatory filing. It said it lost $44 million on revenue of $71 million for the six months ended Sept. 30.

Morgan Stanley, Credit Suisse Group AG and China Renaissance Holdings Ltd. led Mogu’s offering. The shares are trading on the New York Stock Exchange under the symbol MOGU.

(Updates with closing share price in second paragraph.)

--With assistance from Crystal Tse.

To contact the reporters on this story: Michael Hytha in San Francisco at mhytha@bloomberg.net;Selina Wang in San Francisco at swang533@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, ;Jillian Ward at jward56@bloomberg.net, Matthew Monks, Amy Thomson

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