Haidilao prepares for HK IPO

Beijing-based hotpot restaurant chain plans to raise as much as $1 billion via float

Haidilao International Holding, Chinese mainland's biggest hotpot restaurant chain, will kick-start its IPO on Wednesday, planning to raise as much as $1 billion from share sales.

The Beijing-based company's forthcoming listing in the Hong Kong stock market follows that of Meituan-Dianping, a mainland online food delivery and booking giant, which began its listing last week for its potential $4.4 billion IPO in the city.

Pricing its range at HK$14.8 to HK$17.8($1.88-$2.26) apiece, Haidilao is offering 424.5 million shares in total, 91 percent of which will be allocated to institutional investors, and the remainder allotted to the public. At the indicative range, the company has an implied valuation of between $10 billion and $12 billion with a price-earnings ratio of 30.2 times.

With as many as 1,000 shares included per lot, the company's IPO subscription price per board lot would be HK$17,979, the most expensive in Hong Kong's listing history.

The Sichuan-style spicy hotpot restaurant chain's listing is the latest in a string of technology IPOs in the city against the backdrop of a heated trade dispute between China and the United States, ongoing turmoil in emerging markets as well as lingering worries of further US interest rate hikes, which have cooled market sentiment for technology IPOs in the city.

The hotpot restaurant chain, with 362 outlets in the country, notched up a net profit of 647 million yuan ($94 million) in the first six months of this year, climbing 17 percent compared with the corresponding period last year. Its revenue in the same period registered a 54.4 percent surge to 7.3 billion yuan from last year, a substantial amount of which was generated from its restaurant operations, according to the IPO prospectus.

Funds raised from the IPO would be utilized to finance part of the company's expansion plan, develop new technologies and repay its loans, the company said in its filing.

Five cornerstone investors plan to make a combined $375 million purchase of stock offering with a lockup period of six months. Hillhouse and Greenwoods Asset Management have each agreed to buy shares worth about $90 million, while Morgan Stanley and Snow Lake Capital committed to buy about $80 million each. Ward Ferry will purchase about $35 million.

The retail section of the IPO will be available on Sept 12-17. The restaurant chain is expected to list on Sept 26. CMB International and Goldman Sachs are joint sponsors of the listing.