Baby fomula maker Feihe seeks Us$1.14bil from IPO

HONG KONG: China Feihe Ltd, a baby formula producer, started taking investor orders on Monday for its Hong Kong initial public offering which could raise as much as Hk$8.9bil (Us$1.14bil).

The Beijing-based company is offering 893.3 million shares at HK$7.50 to HK$10 apiece, according to terms of the deal obtained by Bloomberg.

The price range implied a market value of Us$8.5bil to Us$11.4bil, the terms show.

The offering would at least be Feihe’s second attempt to conduct an IPO in Hong Kong.

It had applied for a listing in the city in May 2017.

The dairy company went private from the

New York Stock Exchange in 2013 amid a wave of delistings by Us-traded Chinese firms.

China’s baby formula industry met its watershed moment in 2008 when a tainted milk scandal killed six children and poisoned 300,000 others, spurring demand for products by international firms over locally-produced ones.

The country, in a bid to restore consumer confidence, in June released a plan to increase the output of homegrown baby formula.

The government aims to achieve 60% self-sufficiency rate along with improving quality and bolstering consumer confidence for domestic brands in the country’s Us$27bil infant-formula industry. The newly announced plan will also support domestic dairy producers in acquiring or setting up overseas bases for milk supply as well as tightening regulations on milk-powder imports and online sales platforms.

Feihe plans to use the proceeds for purposes including offshore debt repayment, potential acquisitions and funding the operation of a new manufacturing plant, the terms show.

The company is expected to stop taking investor orders Nov 5 before beginning trading on Nov 13.

Jpmorgan Chase & Co, China Merchants Securities Co Ltd., CCB International Holdings Ltd. are joint sponsors of the offering, according to a preliminary prospectus.