China Feihe Limited, maker of the nation’s best-selling infant milk formula, probably attracted close to HK$10 billion of orders from retail investors in what could be the third largest stock offering in Hong Kong this year, according to a survey of stockbrokers.
The company offered 10 per cent of its global sale of 893.34 million shares to individual investors and 90 per cent through international placements. The offering could raise as much as HK$8.93 billion (US$1.14 billion) at the top end of its offer range of HK$7.50 to HK$10 apiece. Only Budweiser Brewing Asia-Pacific and ESR Cayman have raised more money from Hong Kong IPOs this year.
The retail portion is probably oversubscribed by 8 to 10 times, locking up as much as HK$9.8 billion of funds from the banking system, according to estimates from six brokers surveyed by The South China Morning Post after the offer closed on Tuesday. The company, whose baby milk is endorsed by actress Zhang Ziyi of Crouching Tiger Hidden Dragon fame, may have benefited from greater publicity in the run-up to its share sale.
“An oversubscription of about 8 times is good, considering that the IPO is quite sizeable,” said Edmond Hui, chief executive of Bright Smart Securities in Hong Kong, which took part in the survey. “The IPO came at the right timing as the market sentiment has improved and Feihe’s well-known retail brand helped attract investors.”
China Feihi shares are expected to start trading on November 13.
The company is seizing the opportunity to raise funds as market sentiment has improved and stocks in Hong Kong rebounded following a summer of troubles sparked by anti-government protests. The Hong Kong Monetary Authority and some of the city’s biggest lenders have cut interest rates to spur the economy while the government took measures to support the housing market.
Zhang, who turns 41 in February, announced last week that she was expecting her second child soon. Her career in Hollywood has earned her nominations for the Best Actress at the Golden Globe Awards.
“She helps build up the image of Feihe, that is why the IPO is popular,” said Gordon Tsui Luen-on, chairman of Hong Kong Securities Association. “The company sells premium baby milk formula, and can tap into a market in China where parents can afford to buy highly quality food products for their children.”
Feihe, which means `flying crane’ in Chinese, was founded in 1962 in the North-eastern province of Heilongjiang. It had a 15.6 per cent share of the market among domestic baby formula brands based on retail sales value in 2018, according to research firm Frost & Sullivan.
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