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Alibaba-backed Babytree files for Hong Kong IPO

Babytree, a Chinese online parenting services platform backed by Alibaba Group Holding Ltd., has filed for an IPO in Hong Kong.

Morgan Stanley Asia Ltd., Haitong International Capital Ltd. and China Merchants Securities (HK) Co. Ltd. are joint sponsors of the listing, according to an application proof filed June 28 with the Stock Exchange of Hong Kong. UBS AG Hong Kong Branch is acting as lead financial adviser, while Fosun Hani Securities Ltd. is co-financial adviser.

Details of the float, such as the share offering, pricing and timeline, are yet to be determined.

Babytree is valued at US$2.19 billion after a strategic investment from Alibaba announced in June. The Chinese e-commerce giant's equity investment in the deal was approximately US$214 million, representing 9.9% of Babytree's share capital, according to the application proof.

The online business said it has a range of other Chinese investors, including Fosun International Ltd., TAL Education Group, Jumei International Holding Ltd. and Matrix Partners China.

Founded in 2007, Babytree claims to be the largest online parenting community in China, with 200 million monthly active users. Its platform also offers e-commerce and customer-to-maker services for maternal and child-rearing products.

The company posted a loss of 911.1 million Chinese yuan in 2017 after recording losses of 934.5 million yuan in 2016 and 286.4 million yuan in 2015.

Babytree said its future strategies will include monetizing the business model, expanding the global business, and optimizing research and development.

It cited research from Frost & Sullivan that showed the market for mother-and-child products and services was a driving force behind the growth in spending by young families in China from 2013 to 2017. Meanwhile, the number of new births increased to 17.2 million in 2017 from 16.4 million in 2013 as the Chinese government gradually loosened its one-child policy.

"The young family spending market is expected to further diversify, and other family members' needs will be further explored," Babytree said. It added that the proportion of mother-and-child-related spending is expected to continue growing to 20% of total spending by young families in 2022.

As of June 29, US$1 was equivalent to 6.62 Chinese yuan.