The Business of “Blind Boxes”: What does Pop Mart’s Prospectus Reveal?

As China’s fastest-growing toymaker, Pop Mart International Group announced today that the company is planning to sell 135.7 million new shares to global investors, of which 16.3 million shares will be offered publicly in Hong Kong and approximately 119.4 million shares will be offered internationally in four days. The average share price ranges from HK$31.5 to HK$38.5.

Pop Mart is expected to be listed on the Hong Kong Stock Exchange under the stock code “9992” on Dec. 11. It plans to use the IPO proceeds to improve its distribution channels, expand overseas, fund potential investments, boost its intellectual property (IP) inventory, and digitize its operations.

If the pricing is completed at the upper limit of the IPO range, Pop Mart will raise about HK$5.224 billion (about US$670 million), which is much higher than the earlier expected US$200 to $300 million. The IPO estimate value will reach approximately US$7 billion dollars.

Pop Mart is by far the largest pop toy company in China, which has 8.5 % of the market share, according to Frost & Sullivan’s report. By June 2020, the company had a total of 93 IPs, comprising 12 proprietary IPs, 25 exclusively licensed IPs, and 56 non-exclusively licensed ones.

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Millennials and Generation Z are the target audience of the brand due to its “blind box” feature. The toys are sold in “blind boxes”, where consumers buy a package with no labeling, making their purchase a surprise. The excitement of guessing and unpacking the product is unprecedented. 

Even though Walt Disney and Universal Studios are Pop Mart’s non-exclusive licensed IP providers, the company does not want to follow Disney’s branding strategy, but aims to establish a unique toy brand in China.