Chinese hotpot chain Haidilao’s US$963 million IPO makes it Hong Kong’s fifth largest this year

Demand for IPO exceeds supply as institutional buyers oversubscribe 20 times

PUBLISHED : Tuesday, 18 September, 2018, 1:44pm
UPDATED : Tuesday, 18 September, 2018, 11:02pm

Haidilao, China’s biggest hotpot restaurant chain, has priced its US$963 million Hong Kong IPO at the upper end of the price range at HK$17.8, after the offering was heavily oversubscribed by both retail and institutional investors, according to sources.

The public sale tranche – 9 per cent of the total offering – was overbought more than four times. The international placement tranche, which mainly targets institutional investors, was oversubscribed 20 times.

China Investment Corp, the Chinese sovereign wealth fund; Singapore’s sovereign wealth fund GIC; Norges Bank, the central bank of Norway; UBS Global Asset Management; Fidelity Management & Research, and Nomura have subscribed to the IPO.

China’s biggest hotpot chain Haidilao taps Hillhouse, Morgan Stanley as cornerstone investors in up to US$963 million IPO

Haidilao’s HK$7.56 billion (US$963 million) fundraising will make it the fifth largest in Hong Kong this year, after China Tower, Xiaomi, Meituan Dianping and Ping An Good Doctor.

The price implies a valuation of the company at around US$12 billion.

Previously, the company said it had secured US$375 million from five cornerstone investors.

Hillhouse Capital and Greenwoods Asset Management have committed US$90 million each. Morgan Stanley Asia and Morgan Stanley Investment will jointly take a stake worth US$80 million. Snow Lake Capital and Ward Ferry will invest US$80 million and US$35 million respectively.

The hotpot company, which is known for offering alternative services such as free manicures and shoe-polishing for customers waiting for a table, has expanded its operations rapidly to cater to a growing middle class population whose consumption is considered an integral part of China’s new-economy sector.

The chain owns 363 restaurants in mainland China, Hong Kong, the US, Taiwan, Singapore, Japan, and South Korea, according to the latest version of its prospectus.

It generated first-half revenue this year of 7.3 billion yuan (US$1 billion), up 54.4 per cent on the year. Net profit increased 17 per cent to 647 million yuan during the six-month period.