Social commerce platform Yunji, which was fined by Chinese authorities in 2017 for running an online pyramid scheme, just filed a US stock market initial public offering on Thursday.
With Morgan Stanley, Credit Suisse, JPMorgan, and CICC as underwriters, the company plans to raise up to US$200 million in the IPO, according to its prospectus. Yunji says it had 6.1 million transacting members and a 93.6% repeat purchase rate in 2018. Its gross merchandise volume stood at RMB 22.7 billion (US$3.4 billion) in 2018.
The Hangzhou-based company, which was founded in 2015, had been fined RMB 9.6 million by the local authority for violation of the Regulations on the Prohibition of Pyramid Selling in the early stage of their operations in May 2017. Yunji was then the first and only social commerce platform to have been fined for running an online pyramid scheme and WeChat banned Yunji’s official account on its platform three months later.
Yunji said it had got verbal confirmation from the local authority in Hangzhou that none of its entities was in violation of the pyramid scheme regulations and other applicable laws as of December 2018.
But there are “uncertainties in the interpretation and application of existing PRC laws, regulations and policies relating to our current business model, including, but not limited to, regulations regulating pyramid selling,” the company admitted in its SEC filing.
Peanut Diary, a Guangzhou-based social commerce platform with a similar business model as Yunji’s, has recently been handed an RMB 74.5 million fine by the local market regulator.
Write to Luna Lin at [email protected]
Editor: Nadine Freischlad