Investors pressure UV protection gear maker Beneunder to cut its HK listing

Investors are pressuring a $3 billion Chinese UV protective gear maker to cut its planned Hong Kong listing, fearing the firm’s advertising-heavy business model is unsustainable .

Beneunder Limited, a Sequoia China-backed company that produces outdoor apparel, built its success by tapping into some consumers’ desire for lighter skin. He applied for registration in April.

But the company has recently come under scrutiny after China’s official Communist Party newspaper, People’s Daily, accused it in June of exaggerating its technological prowess and investing money in The advertisement.

Investors are pressuring the company to halve a $3 billion valuation it hit after raising $46 million in a Series C funding round this year, people have said. close to the file.

“Beneunder’s price-to-earnings ratio is much higher than Lululemon and Uniqlo,” one person said, suggesting the company was overvalued.

The company is expected to raise about $200 million to $300 million in an IPO, which could happen in the second half, the sources say.

Beneunder did not respond to a request for comment.

The company invested 71.6 million Rmb ($10.6 million) in research and development in 2021, or 3% of its annual revenue, according to a prospectus. Its marketing expenses amounted to Rmb 586.4 million, or 24% of the startup’s gross sales.

Beneunder said that in 2021 he collaborated with more than 600 influencers, who helped the brand generate a total of 4.5 billion page views.

Since its founding in 2013 by engineering graduates Ma Long and Lin Ze, the company has launched a line of products aimed at urban women who don’t want to tan.

The company posted an advertisement for a sun hat on its official Douyin account in July that read, “If you protect yourself from the sun, you will be whiter than others. Otherwise, you’ll be uglier.

In recent years, Beneunder has tapped top Chinese celebrity live streamers to promote its flagship product, an umbrella with sunscreen fabric.

Austin Li, once one of China’s biggest e-commerce influencers before disappearing after appearing to make a reference to tanks in Tiananmen Square, endorsed Beneunder’s umbrellas, jackets and sun hats during live streams. direct, describing them as “essentials”.

A banker working on the deal said the products appeared to run counter to Beijing’s “common prosperity” policy, which aims to reduce social inequality and curb “excess income”.

Mark Tanner, managing director of China Skinny, a Shanghai-based marketing and research agency, said that to appear in line with Beijing’s common prosperity policy, Beneunder could adjust the focus of his story to focus more on the health than beauty.

“They have to be very careful how they present their business,” Tanner said.

The company has strived to diversify beyond sun protection. Last year, sales of UV protection equipment accounted for 79.4% of its overall revenue, compared to 99.3% in 2019.

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