A niche healthcare play is coming to market, offering investors exposure to the animal kingdom.
New Ruipeng Pet Group – the largest pet care platform in China – is preparing to go public in New York.
The Shenzhen-based company filed for its initial public offering (IPO) with the Securities and Exchange Commission (SEC) on January 23. It did not announce a date for the launch in the submitted paperwork, but it will list on the Nasdaq under the ticker “RPET.”
New Ruipeng did not disclose the total units on offer or initial pricing but included the typical placeholder sum of $100 million in its filing fee schedule. Bookrunners for the deal include Morgan Stanley, Credit Suisse, CICC, and UBS Investment Bank.
Founded in 1998, New Ruipeng has been providing veterinarian services to China's pets for over two decades and has expanded into other segments, including third-party diagnosis services, continued veterinary education, and marketing-as-a-service, according to its prospectus.
With over two decades in the industry, New Ruipeng undoubtedly has won the lion's share of the pet care industry. At the end of 2021, the group had 23 pet hospital brands and 1,887 pet hospitals across China, roughly triple the number of hospitals run by its domestic competitors.
Despite its enormous size, New Ruipeng has yet to become profitable. For the first nine months of 2022, the company generated revenues of $607 million and took net losses of $156 million.
Pets in China are big business. According to Statista, China was home to 220 million pets last year, up from 200 million in 2021.
Meeting the demands of this exploding four-legged population stimulates a lot of consumption. This bodes well for New Ruipeng, with veterinary services being the second largest market segment after pet food. Many pets are underserved in this enormous market, reflected by the fact that less than half of China's cats and dogs were inoculated in 2021, despite being required to receive annual inoculation. As awareness of pets' needs increases, the veterinary market could grow further still.
In 2023, the total value of China's pet market is expected to reach approximately $65 billion, according to a research report released by the Shanghai-based publication The Paper last year.
New Ruipeng is still expanding its hospital base and could potentially cement its dominance in its home market, depending on how the deal goes. Yet, like much to do with the economy this year, the outlook remains hazy for Chinese IPOs. Regulatory risks remain for Chinese firms in the U.S., especially with heightened scrutiny around auditing. There is also uncertainty around investors' appetite for new deals after 2022, which was a disappointing year for IPOs generally.
Despite this, Chinese stocks have done well so far in 2023. After falling in Q4 2022, the Nasdaq Golden Dragon China Index has been on a strong rebound, soaring an eye-popping 14% in the first week of trading this year.
Joining Ruipeng in the cue is Chinese LiDAR company Hesai, which may be one of the first large Chinese firms to go public in the U.S., having filed just last week.
Investors who remain bullish on China and the enduring appeal of pets to the country's billion-plus consumers will be keen to follow this deal.
This post was produced and syndicated by Wealth of Geeks.