YST Dairy raises HK$3.29b after low-end pricing

YuanShengTai Dairy Farm, the mainland's fourth-biggest raw milk producer, priced its HK$3.29 billion initial public offering near the low end of expectations, leaving some room for gains when the shares debut, sources familiar with the deal said.

The share sale was the second in Hong Kong in two months from a dairy company and comes amid a surge in capital markets activity in the dairy industry in the country, with US$4.6 billion of mergers and acquisitions and equity deals this year.

The year is shaping up to be the busiest-ever for both M&A and equity issuance in Asia, excluding Japan, as investors bet on booming demand in China.

Huishan Dairy, the country's second-biggest raw milk producer, raised US$1.5 billion in a float in September, with other large transactions including China Mengniu Dairy's US$1.6 billion takeover of Yashili International in June.

Growing demand for milk and other dairy products has spurred other deals around the world, including a US$1.1 billion listing last month by Mexico's largest dairy producer, Grupo Lala, and an ongoing takeover battle for Warrnambool Cheese and Butter Factory in Australia.

"There are many positive drivers for the industry," said Anson Chan, an analyst at KGI Securities.

The share offer got a last-minute boost after Beijing unveiled major economic reforms last week, including allowing millions of families to have two children in the country's most significant liberalisation of its strict one-child policy in about three decades.