Haidilao, the $12 Billion Hot Pot Chain Goes Public in Hong Kong

After submitting its prospectus in May, Haidilao International Holding Ltd. is finally going public on the Hong Kong Stock Exchange on Sept. 26.

The company has priced its shares at HK$17.8, and will raise about HK$7.27 billion through its initial public offering (IPO). The offering price puts the restaurant chain at a valuation of $12 billion, greater than all of the publicly listed restaurants in Hong Kong combined, according to Caixin Global.

Founded in 1994, Haidilao is a Sichuan-flavored hot pot chain known for its great service and authentic flavors. It operates more than 300 restaurants worldwide and serves more than 100 million customers annually. Known for its popularity-induced lines ups, the restaurant offers services such as free snacks and drinks, games, manicures and more, for customers enduring long hours of wait time.

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For the 424.5 million shares offered through the IPO, only 9 percent is allotted to the public, while the remaining 91 percent are allocated to institutional investors. With around 213 million shares subscribed through over 13,000 applications, the publicly offered shares are over-subscribed by 4.56 times.

According to its prospectus, 60 percent of the funds raised will be used for company expansions in the next three years, while 20 percent will be used for R&D and the application of new technology, and 15 percent for loan repayment. The underwriters of this IPO include CMB International Capital and Goldman Sachs.

In 2017, Haidilao earned a revenue of 10.76 billion yuan ($1.57 billion), up 35.9 percent from the year prior, while its revenue grew by 7.5 percent to 1.19 billion yuan. A break down of Haidilao’s revenue in 2017 shows that 97.6 percent of its total revenue came from its restaurants business, while takeout and sale of seasoning and raw materials contributed 2.1 percent and 0.3 percent respectively.

According to a report by Sullivan, Haidilao ranks first in revenue amongst all Chinese food restaurants around the world for the year 2017.