BABYTREE Group, a parenting website operator, has priced its Hong Kong initial public offering (IPO) at the bottom of a marketing range, people close to the deal said, reducing its valuation and implying a “down round” for investor Alibaba Group Holding Ltd.

Babytree will sell shares in the initial public offering at HK$6.80 (87 U.S. cents) each — the low end of a range that reached HK$8.80 — to raise US$217 million, instead of up to the US$1 billion initially targeted.

The IPO will value Babytree at US$1.5 billion, rather than the US$2 billion valuation in late May when Alibaba invested US$214 million. That would mark a rare instance of a tech-related firm suffering a down round, or a fall in valuation following new investment.

Globally, 11.8 percent of all deals involving venture capital this year have suffered down rounds, industry data provider PitchBook said. That is the lowest rate in at least a decade.

For Alibaba, Babytree represents one of 130 investments totalling US$48 billion since 2015, showed data from Refinitiv.

If Babytree fully exercised its “green shoe” option, allowing it to sell up to 15 percent more shares in a short window after listing, its post-shoe valuation will reach US$1.69 billion.

Babytree is the latest in a series of listing hopefuls to see funding ambitions drastically scaled back in Hong Kong, even as the financial hub is on track to become the world’s top IPO center by volume this year. (SD-Agencies)