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Kenneth Lo, founder and chairman of Crystal Group. Photo: Felix Wong

World’s largest garment maker eyes HK$4.5 billion IPO, Hong Kong’s biggest since 2015

Listing has attracted cornerstone investors including owners of Uniqlo and Victoria’s Secret


Crystal International Group, the Hong Kong-based garment manufacturer, is looking to raise as much as HK$4.48 billion (US$570 million) in an initial public offering (IPO) on Monday, after having attracted cornerstone investors including the owners of Uniqlo and Victoria’s Secret.

It’s the largest home-grown IPO since March 2015, when Hong Kong Broadband Network raised HK$6.7 billion, according to Bloomberg data.

Ranked as the world’s largest apparel maker by production volume in 2016 by research firm Euromonitor, Crystal supplies garments to customers including Fast Retailing, the owner of fashion chain Uniqlo, Gap, H&M, and L Brands, which operates brand Victoria’s Secret.

The firm has priced the offering between HK$7.3 and HK$8.8 per share, with 509.3 million shares to be issued in total, according to its filing to the Hong Kong exchange.

Fast Retailing has agreed to subscribe for shares worth the equivalent of US$20 million, while L (Overseas) Holdings, a subsidiary of L Brands, will subscribe for US$10 million worth of shares.

“We will invest over US$400 million in capital expenditure from 2017 to 2019, which will improve our production capacity by more than 50 per cent,” said Ernest Lee, the firm’s chief financial officer.

Kenneth Lo, founder chairman of Crystal Group. Photo: SCMPOST

He added that Crystal plans to use 45 per cent of net proceeds to expand its manufacturing capacity in Vietnam, where it is already larger than in China, and Bangladesh over the next three years.

The company also plans to expand into fabric production and repay loans.

Crystal’s net profit stood at US$69.2 million in the first half of this year, rising 31 per cent from the same period last year. It recorded full-year net profit of US$123.7 million in 2016, US$68.3 million in 2015, and US$81.8 million in 2014.

It held an estimated 0.4 per cent of global market share last year in the highly fragmented apparel manufacturing industry, according to the filing. The industry is likely to consolidate further in future after a year of considerable consolidation in 2016, it added.

Most of the firm’s revenue comes from a handful of major customers, with sales to its five largest customers accounting for almost 70 per cent of revenue last year.

The firm anticipates it will continue relying on a limited number of high-quality customers in future. It now has 20 manufacturing facilities in China, Vietnam, Cambodia, Bangladesh, and Sri Lanka, producing six categories of product: lifestyle wear, denim, intimate, jumpers, sportswear, and outdoor apparel.

Crystal was founded in 1970 by chairman Kenneth Lo, the eldest son of late textile tycoon Law Ting-pong, who created apparel brand Bossini.

Its shares will begin trading on November 3 on the Hong Kong stock exchange’s main board.

Morgan Stanley Asia Limited and HSBC Corporate Finance (Hong Kong) Limited are joint sponsors of the listing.