Energy Monster, the Chinese mobile-device-charger startup – backed by Alibaba and SoftBank – is caught up in an ownership dispute that could further affect its Nasdaq IPO listing.
The listing is already hindered by new US regulations to delist foreign companies.
Shanghai-based venture capitalists Yiming Feng and Sicheng Yin are pressing a case through both US and Chinese courts against Energy Monster CEO Guangyuan Cai, claiming he reneged on a deal to give them a joint 3% stake in the business.
Energy Monster, which rents out power banks, or charging stations, for use by customers in Chinese shopping malls, restaurants, bars and other public places, filed for an initial public offering on Nasdaq earlier this month (March).
The company has not yet set a date for the anticipated $300m (€254m, £216m) IPO but a discovery filing by Feng and Yin, partners at Atom Venture Capital, in the US said it was “imminent”.
Feng and Yin are said to have initially filed a lawsuit in China in January, arguing they played a vital role in the conception and development of Energy Monster but Cai went back on the equity transfer promise.
US court order win
Last week, Feng and Yin applied for and won a US court order authorising them to obtain information “related to the 3% equity agreement”, from Citigroup Global Markets and Goldman Sachs & Co LLC, the IPO’s underwriters.
The petition document filed in the US District Court for the Southern District of New York said the information “will help [the] petitioners prove their claims in the Chinese litigation.”
Energy Monster, Citi and Goldman have not commented on the matter. Neither has chief executive Guangyuan Cai, who owns 6.6% of Energy Monster.
In its 12 March IPO application, Energy Monster said Cai was advised by his China litigation counsel that the plaintiffs’ claims “are baseless and frivolous”, and the CEO is “contesting the claims vigorously”.
Energy Monster’s IPO filing cautioned: “there can be no assurance that Mr Cai will be able to prevail in the lawsuit or that he will be able to settle the lawsuit on terms favourable to him.”