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Popular Hot Pot Chain Haidilao Prices Hong Kong IPO at Top of Range

The Chinese Sichuan-style spicy restaurant is set to raise nearly $1 billion in its IPO this week.

Anna Vodopyanova
    Sep 24, 2018 10:56 AM  PT
Popular Hot Pot Chain Haidilao Prices Hong Kong IPO at Top of Range

Haidilao International Holding Ltd. has priced its shares for an initial public offering in Hong Kong that would raise China's most popular hot pot chain HK$7.27 billion ($930.4 million).

The company, based in Beijing, set its price at HK$17.80 apiece and is ready to launch the public float on Wednesday, according to a report by Caixin Global news agency. The pricing was at the top of the expected range of HK$14.80 to HK$17.80 per share.

If successful, the pricing would give Haidilao, which is a mahjong term in Sichuan for "fortune," a valuation of approximately $12 billion – "greater than all other Hong Kong-listed restaurants combined," Caixin said.

In addition to the 38.2 million shares to be offered at the IPO in Hong Kong, the company has also offered 386.3 million shares in a private placement to international investors, as well as 63.7 million shares to cover over-allotments, if any.

Among the cornerstone international investors are Hillhouse Funds, Greenwoods Capital Partners, Snow Lake Funds, Ward Ferry Asian Smaller Companies Fund Ltd., and Morgan Stanley.

Founded in 1994, Haidilao operates 362 outlets in China and has locations in Japan, United States, South Korea, and Singapore, specializing in Sichuan-style spicy hotpot. For the first six months, the company posted a profit of $94 million, up 17 percent from a year ago. Its revenue jumped 54 percent during the same period to $1.1 billion.

According to the company's recent filing, the majority of the proceeds from the stock sale, 60 percent, would be used for Haidilao's expansion, specifically, 420 new restaurants to be added by 2020. The remainder, 20 percent, 15 percent, and 5 percent, would be used for the implementation of new technology, repayment of loans, and working capital, respectively.

CMB International Capital Ltd. and Goldman Sachs Group Inc. are the main underwriters in this offering.