Ruhnn, a startup that claims to be the largest internet key opinion leader (KOL) facilitator in China, has raised US$125 million in an initial public offering in the United States.
The Chinese firm offered 10 million American depositary shares (ADS) at US$12.5 per unit for a Nasdaq listing.
Backed by Alibaba Group, Ruhnn connects influencers who engage their followers and consumers to commercial brands and retailers, in particular, e-commerce players. Its services range from product design, sourcing and online store operations to logistics and after-sale services.
Ruhnn was founded in 2016 by Feng Min, a former online shop owner. As an influencer incubator, Ruhnn selects, trains and manages contracted influencers, but instead of taking a cut from the advertising commissions, the company creates self-branded products for the influencers.
One of its major sources of income is the sales revenue from individual influencers’ online retail stores and third-party online merchants.
In 2018, Ruhnn owned 86 online retail stores, recording 1.9 billion yuan (US$282 million) in gross merchandise value (GMV). As of the end of the year, the firm had 113 signed influencers with an aggregate of 148.4 million followers across major social media platforms in China.
Ruhnn claimed in its IPO prospectus that the aggregate number of its influencers’ followers across multiple social media channels reached 148 million in 2018, including 111 million on Twitter-like platform Weibo, and 30.7 million on Weitao — the social media feature under Alibaba’s e-commerce marketplace Taobao — and 6.7 million on WeChat.
In 2016, Alibaba invested 300 million yuan (about US$44.6 million) in Ruhnn during the latter’s Series C funding round. According to the prospectus, Alibaba-owned Taobao China will hold 7.5 percent of Ruhnn’s stake after the IPO.
Ruhnn shares made a dismal debut as they began trading on the Nasdaq Global Select Market on Wednesday. Within an hour of trading, Ruhnn found its stock sliding to US$10.33 per ADS. The counter eventually closed at US$7.85, down more than 37 percent from the offer price.
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