HONG KONG (Reuters) - China Feihe (6186.HK), the country’s largest infant milk producer, has priced its Hong Kong initial public offering (IPO) at HK$7.50 a share at the bottom of the range to raise $855 million, according to two sources with knowledge of the matter.
The deal values the company at $8.6 billion. Last week Feihe indicated a price range of between HK$7.50 and HK$10 a share that at the top would have given it a market capitalization of $11.4 billion.
The float is the sixth largest on the Hong Kong Exchange this year, helping boost the bourse which had until recently lagged far behind arch rivals Nasdaq and the New York Stock Exchange (NYSE).
Including Feihe, companies in Hong Kong have sold shares worth $21.8 billion via IPOs so far this year, compared with $24.4 billion on Nasdaq and $22.5 billion via the NYSE.
Feihe was previously listed in New York but was taken private in 2013 in a deal led by Chairman Leng Youbin and Morgan Stanley’s Asian private equity arm.
This is its second attempt at a Hong Kong listing after Feihe filed plans in 2017, but did not follow through with a float.
The company went on to buy bankrupt U.S nutritional supplement supplier Vitamin World in early 2018.
In its prospectus, Feihe cited figures showing it holds with a 7.3% share of the infant milk market.
The company recorded sales of 10.4 billion yuan ($1.49 billion) last year and a net profit of 2.24 billion yuan, compared with profits of 1.16 billion yuan in 2017, the prospectus showed.
About 40% of the proceeds from the IPO will be used for the repayment of offshore debts, the company said, with a further 20% set aside for acquisitions. The rest will be used to finance a plant development as well as other business expansion and further research.
The transaction is being led by China Construction Bank International, China Merchant Securities and JPMorgan.
Trading in the shares will begin on Nov. 13.
Reporting by Scott Murdoch and Julie Zhu; Editing by Jennifer Hughes and Christian Schmollinger