Hong Kong Stock Exchange IPO (Photo : Reuters)
Xiabuxiabu Catering Management Co. is planning to raise approximately HK$1 billion ($129 million) on the Hong Kong stock exchange IPO. In order to do this, Xiabuxiabu offers 227.1 million shares for sale to the public from HK$4.4 to HK$5 per piece, China.org.cn reported.
The hotpot restaurant chain in mainland China has confirmed the over-allotment option of 34 million additional shares offered to its international underwriters. When this option is exercised, the proceeds of the IPO and the company's market capitalization will increase.
According to Xiabuxiabu CEO Yang Shuling, the company can help finance the opening of 453 restaurants throughout mainland China by 2018, which will be added to its existing 420 restaurants, with a maximum of 74.4 percent of the net IPO proceeds it has earmarked.
Yang said that the new restaurants would be strategically spread across the southeast region of China, in Shanghai, Beijing and Tianjin as well as Shanxi and Henan provinces.
The CEO also said that another 10 percent of the IPO proceeds would be allocated to a new logistics and production center in Beijing, and approximately 12.6 percent of the money raised in Hong Kong will be spent on a similar center that the company plans to build in Shanghai.
Market research institution Frost & Sullivan chairman Ho Kuang-Chi pointed out that Xiabuxiabu has successfully set up "a mature business model that establishes a modern and affordable dining style, generates high profit, guarantees quality, and can be replicated fast."
In 2013, Xiabuxiabu dominated the fast-casual hotpot restaurant market in mainland China with its 51.9-percent market share, according to Frost & Sullivan.
Merrill Lynch investment banker Esther Ho estimated the valuation for Xiabuxiabu shares at HK$5 per share or around 17 times earnings.
It is expected that the trading of Xiabuxiabu's shares on the Hong Kong stock exchange will start on Dec. 17.
Xiabuxiabu shares the forecast top three IPO slots with CGN Power and Feiyu Technology International Co., according to The Standard.
