Robust demand seen for shares of Huishan Dairy

China Huishan Dairy looks set to raise all or almost all of the HK$10.1 billion it is seeking in its initial public offering, giving it muscle to build on a strong position in an industry that is expected to see explosive growth but also much consolidation.

The offering, the second-biggest in Hong Kong this year, was covered "multiple times" with demand from hedge funds, sovereign wealth funds and other asset managers, sources said.

The shares were priced at HK$2.67 each, the top of a marketing range of HK$2.28 to $2.67, a source said.

In a sector bedevilled by food safety scandals, investors are drawn to Huishan's position as the country's largest integrated dairy firm, with control over grass planting, dairy processing and product development - giving it more oversight on quality.

Demand from retail investors had also been good given the large size of the offering, boding well for the stock's debut on September 27, said Jasper Chan, a corporate finance officer at Phillip Securities, which offers margin loans for small investors looking to buy into the stock.

Of Huishan's global offering of 3.78 billion shares, 10 per cent was earmarked for Hong Kong.

"The price will go up, because this is the only company in China that does everything in the milk industry," Chan said.