Huishan Dairy eyes easing in one-child law
Boost in demand for baby formula expected from likely policy change, the company says as it markets US$1.3b share offer to fund growth
China Huishan Dairy, which is marketing a share float to list on the Hong Kong stock market, aims to boost its dairy herd and expand production of milk products as it gears up for an easing of China's one-child policy, chief executive Yang Kai said.
To increase consumer confidence in its products it imports heifers from Australia and uses alfalfa seed from North America as fodder, and breeds calves using imported frozen semen, Yang said at a press conference to market the share offer in Hong Kong on Thursday.
Huishan Dairy began to market its share offer to institutional investors on Monday last week, aiming to raise up to US$1.3 billion to finance its expansion. The offer is being promoted as the world's most populous country moves to end its decades-old one-child policy as the nation's population ages and a shortfall looms in working-age people.
It is understood that the offer has secured at least three cornerstone investors - Yili Group, Cofco Agricultural, and Norges Bank, which manages the Norwegian government's pension fund - which took up shares worth US$220 million, representing about a 10th of the entire IPO. The rest of the offer was reportedly fully subscribed on the first day.
The likely easing of the mainland's one-child policy should be positive for the infant formula market, Yang said last week.
The one-child policy has been in effect since 1979. But strong economic growth since then and a growing demographic imbalance which has seen the aged population rise and a decline in working-age people have now prompted policymakers in Beijing to consider adjusting the child limits.