The IPO Buzz: DDC Enterprise Cuts IPO’s Size & Prices Deal at $8.50 – $1.00 Below Range

Asian convenience food company DDC Enterprise Limited (DDC) downsized its IPO to 3.9 million shares – down from 4.25 million in the prospectus – and priced the deal at $8.50 – $1.00 below the bottom of its $9.50-to-$11.50 range – on Thursday night (Nov. 16, 2023). The IPO raised $33.15 million – about $11 million less than the estimated proceeds under the deal’s original terms. DDC’s stock opened flat at $8.50 at about 10 a.m. EST today – Friday, Nov. 17, 2023 – on the NYSE – American Exchange. The stock slipped and traded at $7.40 – down $1.10 from its IPO price –  by around 10:30 a.m. EST today.  DDC’s stock slid some more, closing at $6.21 – down $2.29 or off 26.94 percent from its IPO price – in its first day of trading on the NYSE – American Exchange.

CMB International, The Benchmark Company, Maxim Group, Freedom Capital Markets, Guotai Junan International, Eddid Financial and Tiger Brokers are the joint book-runners.

The Hong Kong-based company says it will use 50 percent of the IPO’s proceeds for working capital to fund business expansion; 25 percent for acquiring suitable targets that operate Ready-to-Cook and Ready-to-Eat brands that complement its current sales channels and customer base; 15 percent to repay shareholder loans with a total principal amount of about $9.01 million, and the remaining 10 percent for cash reserves.

Asian Cuisine Catering to Gen Z Women

DDC Enterprises, also known as DayDayCook, sells Asian convenience foods and offers online culinary content that caters to a mostly female Gen Z clientele (under age 30) in China’s eastern and southern regions. The company says its mission is to promote Asian cooking in the world. Most of DDC’s products are promoted on social media and sold on e-commerce platforms, including livestreaming platforms.

As of June 30, 2023, DDC had 24.6 million paid customers, according to the prospectus.

The company was founded in Hong Kong in 2012 by Norma Ka Yin Chu as an online platform that distributed recipes and culinary content. In 2015, the company entered the Mainland China market. In 2017, DDC began to expand its business from content creation to content commerce. In 2019, DDC expanded its business to include the production and sale of RTH (ready-to-heat), RTC (ready-to-cook) and RTE (ready-to-eat) convenient meal solution products.

DDC Enterprises made its first U.S. acquisition this year. DDC acquired Nona Lim, a San Francisco-based maker of Asian noodles, broths and stir-fry kits. The Nona Lim brand sells Ready-to-Cook Asian noodle meal kits and a variety of soup bases to its customers through an established distribution network in the U.S., including major retailers such as Whole Foods Market, Target and Kroger, the prospectus says.

The company made another acquisition in China in 2023. DDC Enterprises bought a 51 percent equity interest in Shanghai Yuli Development Limited – aka “Yuli” – to add new sales channels in Ready-to-Cook and Ready-to-Eat product categories, the prospectus says.

DDC Enterprises reported a net loss of $16.86 million on revenue of $24.77 million for the year that ended Dec. 31, 2022.

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