Parent of Hong Kong chain store Japan Home Centre begins share offer

International Housewares Retail, which owns the Japan Home Centre chain of shops that sell low-priced housewares, plans to raise up to HK$607 million in a Hong Kong float, even as growth in retail sales slows.

The firm is offering shares in an indicative price range of HK$2.22 to HK$2.81 each, which translates into a price-earnings ratio of 12.6 times to 15.9 times next year's forecast earnings, according to a term sheet seen by the Post.

LIM Advisors, a Hong Kong-based hedge fund with about US$1.5 billion of assets under management, said it would invest US$8 million as a so-called cornerstone investor. That represents just over 10 per cent of the planned initial public offering.

Bankers familiar with the deal said the order book had been fully covered but that a greenshoe option would probably be exercised to allow for the sale of additional shares to both long-only investors and hedge funds.

The retailer plans to use half the proceeds raised to fund the opening of 200 new shops in Hong Kong and other Asian cities over the next three years.

The firm derives 89 per cent of its revenue from its Hong Kong shops, all of which are leased. Co-founder and vice-chairman Lisa Ngai Lai-ha said the firm was cushioned from volatile rental prices because the chain was well known in Hong Kong.