Haidilao, one of China's biggest restaurant chains which specialize in hotpot, raised $963 million for its Hong Kong initial public offering after selling about 8 percent of its equity capital at $2.27 per share. This places the company at a valuation of about $12 billion. Shares of Haidilao will begin trading on the Hong Kong stock exchange on Sept. 26.
The restaurants floating attracted Chinese investment house Hillhouse Capital Group and Morgan Stanley according to Reuters. These entities committed to purchase $375 million worth of Haidilao's shares in the IPO together.
Haidilao has now set its eyes in diversifying into the United Kingdom and Canada as it continues operations in South Korea, Japan, Singapore, and the United States. It has also expressed plans of developing technology that shall ensure food safety and restaurant hygiene.
The restaurant, which has more than 300 branches in China, was able to raise as much through pricing its shares above an indicated range according to sources who spoke with Reuters anonymously.
Haidilao priced its IPO at the upper end of the price compared to the average pricing in Hong Kong after the public sale trance was overbought more than four times and its international placement trance was oversubscribed 20 times, the South China Morning Post reported, citing unnamed sources.
Snow Lake Capital will invest $80 million while Ward Ferry will invest $35 million, South China Morning Post stated. Other big companies that have subscribed to Haidilao's IPO include Singapore's sovereign wealth fund GIC, Norway's Norges Bank, UBS Global Asset Management, Fidelity Management & Research, and Nomura.
Haidilao's IPO became the fifth largest in Hong Kong in 2018. Others who raised large fundraising in Hong Kong were China Tower, Xiaomi, Meituan Dianping, and Ping An Good Doctor.
Reuters noted that Haidilao's above-the-range pricing indicated that investors were highly positive about its market growth despite food hygiene issues it faced two years ago. The restaurant was embroiled in a food hygiene scandal at two of its restaurants in Beijing. One of its branches in Singapore also underwent two-week suspension for violating food hygiene regulations.
Haidilao promptly addressed the scandals and acknowledged some lapses with respective management. It has since started live streaming from its kitchens in Beijing.
The hotpot chain, co-founded by a former tractor factory worker Zhang Yong in 1994, is widely known for its spicy Sichuan recipe. It has also become popular for offering added services like free manicures and board games while customers wait for the next available tables.
