Heytea, one of China’s largest tea beverage chains, is reportedly closing a new round of financing which will valuate the business north of RMB 16 billion ($2.3 billion), up from its last valuation of RMB 9 billion in July.

Why it matters: Beverage categories are blurring in China with bubble tea chains Heytea and Naixue’s Tea competing head-on with coffee giants like Starbucks and Luckin Coffee.

  • Heytea rival Naixue’s Tea is reportedly gearing up for a $400 million initial public offering in the US.
  • Heytea pioneered the digitization of Chinese beverage chains by leveraging social apps like WeChat.
  • Beverage chains are feeling the pinch as a result of a significant drop in business due to the Covid-19 outbreak, and venture capitalists are assessing top players better positioned to weather the epidemic thanks to business scale.

Details: Heytea’s new funding round was led by global Asia-focused private equity firm Hillhouse Capital and Coatue Management, the US fund behind mobility titans including Didi, Lyft, and Grab, local media reported. The size of the investment was not disclosed.

  • Heytea is now operating 450 stores in upwards of 35 cities in China and four stores in Singapore.
  • The company has amassed 21.5 million users on its WeChat mini-app as of 2019. Of the total, 15.8 million were newly added during the year.
  • Heytea could not immediately be reached for comment.

Context: Heytea started out in southern China’s Guangdong province in 2012 and later expanded to most tier-one and tier-two cities in China.

  • With the goal to integrate online and offline experiences, the company set up in June a subsidiary spanning software and hardware design, technical searches, toy and animation development, and others.
  • The company closed its Series A in 2016 and Series B in 2018 for a total of RMB 500 million. Tencent and Sequoia Capital reportedly led the company’s Series B+ for an undisclosed amount in July at a RMB 9 billion valuation.

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via lixin@sixthtone.com or Twitter.