Hotpot firm Haidilao tests investor appetite with $1 billion HK IPO

Haidilao International Holding, one of China’s most popular hotpot chains, is seeking to raise up to $963 million in its Hong Kong IPO to fund its international expansion into markets including the UK and Canada.

Zhou Zhaocheng, Haidilao’s chief strategy officer, told a press conference in Hong Kong on Tuesday that the company plans to open roughly 200 new restaurants in 2018, between 15 and 20 of which would be outside China.

Haidilao already operates in Japan, South Korea, the US, and Singapore, but Zhou said that it was also planning to tap new markets, in particular the UK, Australia, Canada and Malaysia.

The company, which mainly serves spicy Sichuan style hotpot and is popular for the free services and entertainment such as manicures and board games offered to waiting customers, is offering 424 million primary shares in a price range of HK$14.8 to HK$ 17.8 per share ($1.89-$2.27).

Haidilao plans to sell about 8 percent of its enlarged equity capital in the IPO, giving it a potential valuation of up to $12 billion. That is 85 percent of the $14.1 billion market valuation of Yum China Holdings Inc, China’s biggest fast-food chain.

Zhou said that in the new markets, Haidilao’s first step would be to target those countries’ large Chinese population, and look to grow from there. It would also launch localized menus to cater to different tastes.

The company could raise as much as $1.1 billion in total if a 15 percent “greenshoe,” or overallotment option, is exercised after the shares begin trading.