Pomerantz Appointed Lead Counsel in MINISO Group Securities Litigation

On November 8, 2022, U.S. District Judge Percy Anderson of the Central District of California appointed Pomerantz LLP as Lead Counsel on behalf of Nova Scotia Health Employees’ Pension Plan – the Lead Plaintiff, and the class, in Adeel Ashraf v. Miniso Group Holding Limited, et al., CV 22-5815 PA (MRWx) (C.D. Cal.). This securities class action alleges that MINISO Group Holding Limited (“MINISO” or the “Company”) misled the market by negligently preparing its October 2020 IPO Registration Statement in a manner which failed to disclose related parties, the true condition of its business, and other material matters.

MINISO is a Chinese retailer that specializes in various home and lifestyle products with over 5,000 retail stores worldwide. In October 2020, MINISO issued its IPO, raising over $608 million in capital.

Allegations against MINISO include that it failed to disclose in its Registration Statement that: (i) defendants and other related parties owned significantly more MINISO stores than had previously been reported; (ii) as a result, the Company’s overall costs were concealed and investors were misled about the true nature of its business model; (iii) the Company had engaged in suspicious transactions, at least one of which may have put the Company at risk of breaching its contracts with authorities from the People’s Republic of China; and (v) MINISO would be reducing its franchise fees by a drastic amount.

On July 26, 2022, market researcher Blue Orca Capital reported that, despite the Company’s previous claims that over 97% of its stores were owned by independent franchisees, in reality, MINISO owned and operated up to 40% of the stores. The report alleged that the Company had funneled a significant portion of its IPO proceeds directly to its chairman through a phony deal involving a joint venture purportedly intended to fund the construction of Chinese headquarters. The report also revealed that MINISO had been forced to lower its franchising fees by 63% over the previous two years, due to lagging interest in the Company.

On these revelations, MINISO’s ADS price fell approximately 15% and the Company’s overall ADS price has dropped by more than 70% since its IPO in October 2020.