MINISO Group Holding Limited

On October 15, 2020, MINISO conducted its IPO, issuing approximately 30.4 million American Depositary Shares (“ADSs”) at $20.00 per ADS.

On July 26, 2022, Blue Orca Capital published a report alleging, among other things, that MINISO “lies about its core business model” by claiming that 99% of its stores in China are operated by independent franchises. However, an investigation shows that over 620 supposedly independent franchises are registered under the names of MINISO executives or individuals “closely connected” to the Company’s chairman.

On this news, MINISO’s ADS price fell $1.08, or 15%, to close at $6.13 per ADS on July 26, 2022, thereby injuring investors.                                                         

The complaint filed in this class action alleges that Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) Defendants and other undisclosed related parties owned and controlled a much larger amount of MINISO stores than previously stated; (2) as a result, MINISO concealed its true costs; (3) the Company did not represent its true business model; (4) Defendants, including the Company and its Chairman, engaged in planned unusual and unclear transactions; (5) as a result of at least one of these transactions, the Company is at risk of breaching contracts with PRC authorities; (6) the Company would imminently and drastically drop its franchise fees; and (7) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.