Hillhouse-backed detergent maker Blue Moon seeks up to US$1.27 billion in Hong Kong IPO

Blue Moon Group, the Chinese detergent maker backed by Asian private equity manager Hillhouse Capital, kicked off a Hong Kong initial public offering on Friday seeking up to US$1.27 billion (HK$9.83 billion).

Blue Moon Group’s share sale comes as fundraising on the Hong Kong bourse hits a 10-year high at US$44 billion across 127 IPO, including the US$3.5 billion deal by JD Health, data from Refinitiv shows.

The Guangzhou-based firm is selling 747.1 million shares at HK$10.2 to HK$13.16 per share, with an overallotment option to sell up to 112.1 million more shares, according to its prospectus filed to the exchange.

Based on the top-end of the price range, Blue Moon Group is targeting a market capitalisation of HK$75.6 billion as it seeks to go public on the main board on December 16.

Bank of America, CICC, and Citi are the joint sponsors and joint bookrunners of the deal.

Hillhouse Capital, which owns about 9.3 per cent of the firm, will buy shares to prevent it from getting diluted.

The firm, which sells liquid laundry detergent and bathroom cleaning products, plans to use the proceeds to boost production capacity, expanding its sales and distribution network.

Six cornerstone investors have subscribed to a combined US$235 million worth of shares, or 21 per cent of the base offering at the midpoint of the range. These include public utility service provider Shanghai Dazhong, Shanghai-based conglomerate Changjia Group, Temasek‘s subsidiary Fullerton funds; HK-based manager BOCHK Asset Management; and London-based Veritas Asset Management

China’s household care market accounts for over a third of the growth in the global household care industry from 2019 to 2024, and is expected to grow to 167.7 billion yuan by 2024 from 110.8 billion yuan last year by retail sales value, according to data from Frost & Sullivan as cited in the prospectus.

Blue Moon Group‘s revenue and gross profit for the nine months ended September fell slightly year-on-year; the drop in revenue was primarily due to weaker demand for its fabric care products caused by the Covid-19 outbreak.

For the six month ended June, its net profit rose 38.9 per cent to HK$302.2 million from HK$218 million during the same period a year ago.