Restaurant chain begins HK$165m IPO to fund push into new cities

Mainland restaurant chain Tang Palace (China) Holdings is hoping to list on the main board of the Hong Kong stock market as it sets out to raise up to HK$165 million.

Of the 100,000,000 shares for global offering, 10 per cent are earmarked for the Hong Kong public offering.

The target price is between HK$1.25 and HK$1.65 per share. The public offering begins today and ends next Tuesday.

The restaurant group has 22 Chinese and Japanese restaurants in Beijing, Shanghai, Shenzhen, Dongguan, Hangzhou and Suzhou, operating seven brands ranging from fast food to high-end meals. The group now has net current assets of 24.7 million yuan (HK$29.3 million).

It plans to use the money to open eight new Chinese restaurants in first-tier and second-tier cities, and 19 fast-food restaurants in first-tier cities by next year, pushing its operations into new cities including Tianjin, Nanjing and Guangzhou.

But it has no plans to open any restaurants in Hong Kong.

'The rent in Hong Kong is too expensive,' said Matthew Leung, chief financial officer of the restaurant group. 'Unless things change, opening a restaurant in Hong Kong will be like working for the developers.' The group has secured between 2.5 to 10 years of leases on its venues in the mainland, Leung said.