Silver Base Group, a distributor for mainland liquor conglomerate Wuliangye Group, is expected to report a 260 per cent increase in net profit to HK$400 million this year, taking advantage of rising liquor sales on the mainland and aggressive overseas expansion, according to a pre-initial public offering report.
The firm and its existing shareholder were seeking as much as HK$2.4 billion in Hong Kong from a sale of 640 million shares early next month, sources said.
Of the total offering, 87 per cent were new shares while the rest would be sold by Yinji Investment, which was controlled by founder Liang Guoxing, sources said.
UBS is the sole bookrunner.
'Though the market is weak, the company has no intention of lowering its target given its strong cash position,' said a source close to the offering.
Silver Base plans to increase its points of sale to 30,000 from the current 10,000 by adding new customers and working with sub-distributors, according to BOCI, one of the syndicate members of the offering.
BOCI said the company would set aside HK$500 million for capital expenditure for its anticipated expansion plan. But a source close to the firm indicated it would use the majority of the proceeds for acquisitions to further increase its presence in the mainland liquor market.