Selfie app maker underwhelms in largest Hong Kong tech IPO since 2007

Hong Kong’s largest tech IPO for nearly a decade went off with a fizzle rather than a bang today. Meitu, the company behind more than a dozen beautification apps, raised $629 million but its hotly anticipated listing fell flat.

Xiamen-based Meitu operates a range of iOS and Android apps like BeautyPlus, MakeUp and streaming app Meipai, which it claims are used by a total of 456 million users each month. It also sells ‘selfie-optimized’ smartphones. The company took advantage of new regulation that enables mainland China residents to buy Hong Kong stock, but it share price closed at HK$8.50 — the same figure it opened at — having briefly reached a high of HK$8.78 during its first day of trading.

The firm ended the day valued at $4.6 billion, a touch below its pre-IPO $5 billion target, but its listing became the largest for a tech firm in Hong Kong since in 2007.

“Meitu’s majority of users are still in the mainland; they acknowledge our value and we are providing a chance for them to become Meitu’s shareholder,” Chairman Cai Wensheng told Bloomberg. “It’s hard for Chinese to go to the U.S. and open stock brokerage accounts, but because of the Shenzhen-Hong Kong link, everyone can buy our stock.”

The company said in its prospectus that it plans to use the funds it raised to increase its profile in the U.S. and Southeast Asia. Its smartphone business, which started in 2013 and is marketed as optimized for selfie-lovers, accounts for over 90 percent of its total revenue. Meitu plans to expand the scope of its devices and sell them in more markets, but it also hopes to reduce its reliance on hardware to 30 percent of total income. To do so, it said it will focus on pushing its apps and services business, which include in-app purchases within its free apps, e-commerce integrations and advertising.