CHINA: Organic milk firm Shengmu seeks Hong Kong IPO
China dairy firm Shengmu is set to list on the Hong Kong Stock Exchange
Chinese organic milk firm Shengmu is set to float on the Hong Kong Stock Exchange as it looks to continue its expansion.
Shengmu is selling 444.8m shares at a price range of between HK$2.39-2.95. The initial offering will remain open until 7 July. It is looking to raise around HK$1.32bn (US$170m).
According to a report carried by The Wall Street Journal, a subsidiary of Chinese state-owned investment vehicle COFCO, Bao Hua, has committed to be "a cornerstone investor to buy US$30m worth of shares".
In a term sheet detailing the IPO, Shengmu said it planned to use approximately 25% or HK$281m of the proceeds to construct an additional six organic dairy firms between 2014-2015.
Some 30% of the proceeds or approximately HK$336m would be used to acquire "no less than" 15,000 dairy cows domestically and overseas.
Approximately 15% would be used to expand Shengmu's liquid milk production capacity. This would include a spend of HK$59m to build new workshops at its milk processing plant and HK$109m for purchasing equipment and machinery. The aim is for the new production facilities - due for completion in 2016 - to have a capacity of 790 tonnes per day.
BOC International and Goldman Sachs have been appointed to manage the share sale.
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