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Report: Hotpot chain Haidilao targets HK$75.7B in Hong Kong IPO

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Report: Hotpot chain Haidilao targets HK$75.7B in Hong Kong IPO

Chinese hotpot restaurant chain Haidilao International Holding Ltd. is expected to raise up to HK$75.7 billion through its planned IPO in Hong Kong, the South China Morning Post reported Sept. 10, citing a term sheet obtained by the newspaper.

The Beijing-based company plans to issue 424.5 million shares at a price range between HK$14.80 and HK$17.80 per share, which comes out to an implied valuation of US$10 billion to US$12 billion, according to the report.

It was previously reported that the IPO could raise up to US$1 billion.

Haidilao will allocate 91% of the available shares to institutional investors, with the remainder made available to the public.

Trading of Haidilao shares is expected to start Sept. 26, after orders are taken for institutional investors from Sept. 10 and for retail investors from Sept. 12.

So far, the company has lined up US$375 million from five cornerstone investors, according to the SCMP. Hillhouse Capital Group and Greenwoods Asset Management Ltd. have reportedly each committed US$90 million, while Morgan Stanley Investment Management and Snow Lake Capital will each invest US$80 million and Ward Ferry Management Ltd. will commit US$35 million.

Haidilao said in a prospectus filed to the Hong Kong Stock Exchange that it will put IPO proceeds toward funding the chain's expansion plan from 2018 to 2020, developing new technology and projects to enhance food safety and the customer experience, repaying debt and general corporate purposes.

The restaurant chain comprises 362 outlets, with 331 of them across mainland China and 31 spanning Taiwan, Hong Kong, Singapore, South Korea, Japan and the U.S., according to the prospectus. It generated a profit of 647.4 million Chinese yuan for the first half and 1.19 billion yuan for full year 2017, compared with 978.2 million yuan for 2016.

As of Sept. 7, US$1 was equivalent to 6.84 Chinese yuan.