Chinese laundry detergent maker Blue Moon Group Holdings is looking to raise up to $1 billion through an initial public offering (IPO) in Hong Kong. According to sources with knowledge of the matter, the Hillhouse Capital-backed company is setting its sights on launching its IPO sometime during the third quarter of this year.
In a highly redacted offering document that was reportedly submitted on Monday, Blue Moon Group indicated its intention of proceeding with its planned IPO on the Hong Kong Stock Exchange. If it does push through with the listing, the capital it would raise would go a long way in supporting Hong Kong's bid to retain its title as the world's premier IPO destination.
With the tensions between China and the US continually escalating, more Chinese firms are now abandoning plans of selling their shares abroad. US-listed companies are also now considering secondary listing at home. Companies such as JD.com and NetEase recently raised a combined $6 billion through their secondary listings in Hong Kong. Both companies had followed in the footsteps of Alibaba Group, which was able to raise $12.9 billion through its secondary listing last year.
The Guangzhou-based company is reportedly intent on pushing through with the listing despite having experienced massive setbacks to its business due to the coronavirus pandemic. Blue Moon had stated that its production facilities were temporarily shut down in January and February amid the government imposed lockdowns to mitigate the spread of the virus. Fortunately, it was able to immediately resume production in March.
In its stock exchange filing, Blue Moon stated that the pandemic had resulted in difficult challenges to its business, which had mostly affected its first-quarter sales numbers. The company added that it expects to incur up to 120 million yuan in losses due to product returns this year. E-commerce customers are given the right to return or exchange unsold products if they are not disposed of within 90 days.
Regarding its planned listing, the company stated that it will be using the proceeds of the IPO to expand the production capacity of its four main facilities in Guangzhou, Kunshan, Chongqing, and Tianjin. Some of the funds will also be used towards its marketing campaign, which will include celebrity endorsements and sponsorships of television programs.
The company has yet to formally announce a timeline for its IPO but sources claim that it will be launched sometime during the third quarter. Blue Moon has sought the help of Bank of America Securities, Citigroup, and CICC, who will all be acting as joint sponsors for the transaction.