Lan Kwai Fong May Raise $800 Million to Fund China Expansion

Lan Kwai Fong Holdings Ltd., developer of Hong Kong’s stretch of bars and restaurants of the same name, plans to raise as much as $800 million next year and may consider a public offering later as it expands in China.

“We have been talking to several investment banks about raising $700 million to $800 million in the first quarter,” Chairman Allan Zeman said by phone yesterday, without specifying whether the company will sell shares or borrow money. “An IPO is one of the options, but it’s too far off.”

Lan Kwai Fong, in the center of the former British colony’s central business district, has more than 100 restaurants and bars, not all controlled by the company. Zeman said the company plans to develop a similar district in Hainan province, a resort island off China’s south coast, and will seek new opportunities in the cities of Hangzhou and Dalian.

“It once again underlines interest in China’s consumer market,” Richard Ding, chief executive officer of Royal China Group, a Shanghai-based investment and consulting company in retail and property, said in a phone interview today. “Under the current situation, the high-end segment offers even more attractive returns for them.”

Guangzhou Expansion

Consumer companies such as Lan Kwai Fong Holdings are seeking to grow in China as the nation’s consumers get richer. The country’s per-capita disposable income for urban households rose 8 percent to 19,109 yuan ($3,002) last year, almost double that of 2005, according to the National Bureau of Statistics.

Lan Kwai Fong Holdings set up a similar bar-and-restaurant area inside a 1.6 million-square-foot shopping mall in Guangzhou in southern China earlier this year.

The original Lan Kwai Fong in Hong Kong started in the 1980s with a restaurant that served hamburgers, according to the company’s website. The stretch is now an after-work hangout for white-collar workers.

A two-year redevelopment plan, which includes adding a 28- story building with terraces on every floor for smokers who are banned from lighting up indoors, is scheduled to be completed by 2013, Zeman said in a January interview.

Hong Kong’s Sing Tao Daily yesterday reported Lan Kwai Fong Holdings aims to raise as much as $800 million in an initial offering. Zeman, who is locally referred to as “the father of Lan Kwai Fong,” said the company is still evaluating how to raise the funds.

Zeman, 63, in 2008 gave up his Canadian passport to become a naturalized Chinese citizen.

In 1975 he founded a sourcing company to export clothing to Canada, according to the Hong Kong General Chamber of Commerce website. The company, Colby International, was in 2000 sold to Li & Fung Ltd., now the largest supplier of toys, clothing and other consumer goods to retailers including Wal-Mart Stores Inc.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editors responsible for this story: Frank Longid at flongid@bloomberg.net; Stephanie Wong at swong139@bloomberg.net

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