Alibaba-backed e-commerce KOL facilitator Ruhnn aims to raise $200m via US IPO

Hangzhou-based online key opinion leader (KOL) facilitator Ruhnn expects to raise up to US$200 million though its initial public offering in the United States, according to the prospectus that the company filed with the Securities and Exchange Commission.

Ruhnn, which claims to be China’s largest internet KOL facilitator in e-commerce, is aiming for a Nasdaq listing under the ticker RUHN, with Citigroup and UBS Investment Bank as its underwriters.

KOLs use social media platforms, such as Weibo and WeChat, to promote goods on e-commerce sites like Taobao, while KOL facilitators identify, cultivate, and help them monetize their social influence.

Taobao, which is wholly owned by Alibaba Group Holding Limited, holds an 8.56% stake in Ruhnn.

The company said it plans to spend the net proceeds on identifying additional monetisation channels, pursuing strategic investments, and cultivating KOLs.

As of the end of 2018, Ruhnn had 113 signed KOLs on the platform, altogether rallying 148.4 million fans across China’s major social media platforms.

Through these KOLs, Ruhnn said it facilitated an aggregate gross merchandise volume of RMB 2.2 billion (US$328 million) on various e-commerce sites in the first three quarters of fiscal year 2019, which is an increase from the full year’s sales in 2018 and 2017, at RMB 2 billion (US$298 million) and RMB 1.2 billion (US$179 million), respectively.

Ruhnn said in the prospectus that it had created a KOL ecosystem in China by connecting a large number of KOLs and their fans to create a vast network, and connecting this network to a large number of businesses, including brands, online retailers, designers, manufacturers, and suppliers, using existing e-commerce and social media platforms in China.

Ruhnn itself earned RMB 856.2 million (US$125 million) in net revenue in the first nine months of the 2019 fiscal year, absorbing a net loss of RMB 57.5 million (US$8.4 million).

In the fiscal year that ended on March 31, 2018, the company made a net revenue of RMB 947.6 million (US$137.8 million), resulting in a net loss of RMB 90 million (US$13.1 million). In all, internet KOL facilitators in China generated a total of RMB 38.8 billion (US$5.8 billion) in 2017.

The sector is expected to grow at a rate of 38.9% over five years to hit more than RMB 200 billion (US$29.8 billion) in revenue in 2022, according to the prospectus.