Le Gaga Holdings Ltd., the Hong Kong-based greenhouse vegetable producer, raised $103 million in an initial public offering, completing the busiest month for U.S. IPOs in almost three years.
The company, which sells its produce to supermarkets in Hong Kong and mainland China, priced 10.87 million American depositary receipts at $9.50 each yesterday, the top end of its forecast range, according to a filing with the Securities and Exchange Commission and data compiled by Bloomberg. A total of 21 companies have sold shares through IPOs in October, the most since 22 initial sales in December 2007, the data show.
Companies in Asia, the world’s fastest growing region, have posted six of the 10 largest gains among IPOs in the U.S. this year, data compiled by Bloomberg show. ChinaCache International Holdings Ltd., the Beijing-based provider of Internet content to businesses, this month had the biggest first-day rally for a New York listing in three years.
“There’s definitely a lot of demand for consumption stories in emerging markets, and this is a good one,” said Timothy Cunningham, a money manager at Santa Fe, New Mexico-based Thornburg Investment Management, which oversees about $69 billion. “Especially for China, you have a nice long-term growth story there.”
Le Gaga shares climbed 19 percent to $11.26 in U.S. composite trading today.
Bank of America Corp. of Charlotte, North Carolina, and Zurich-based UBS AG led the offering. The company intends to use the money to build greenhouses and improve other facilities, its prospectus showed. The vegetable producer will also use the proceeds for research and development.
“We’re happy,” said Ma Shing Yung, Le Gaga’s chairman and chief executive officer. The IPO was priced “at the high end of the price range, so we’re very happy about it,” he said.
Revenue at Le Gaga rose 41 percent to 281 million yuan ($41.4 million) in its fiscal year ended March 31, its filing showed. The company’s profit increased 82 percent.
The company operates 16 farms in the Chinese provinces of Fujian, Guangdong and Hebei, according to its filing. Le Gaga uses greenhouses to grow vegetables in most of its farms in Fujian and Guangdong. Its two farms in Hebei produce vegetables that grow best in a cooler climate, the filing showed.
Search for Yield
Asian economies will grow 6.6 percent next year, according to the Washington-based International Monetary Fund. China’s economy will expand 9.6 percent. In the U.S., where at least 55 companies have postponed or withdrawn IPOs this year, economic growth will slow to 2.3 percent in 2011, the estimates show.
Benchmark interest rates near zero percent in the U.S. and Japan have also increased demand for higher-yielding assets, leading more investors to IPOs, according to Jason Cooper, who oversees $2.5 billion at 1st Source Investment Advisors in South Bend, Indiana.
“People are finding a hard time to continue to put money into assets that are earning very little and will continue to earn very little,” he said. “People are reassessing how much risk they’re willing to take.”
That’s “probably helped the IPO market,” he said.
Companies from Asia have led the rebound in the U.S. IPO market. JinkoSolar Holding Co., the maker of silicon wafers in China’s Jiangxi province, gained 174 percent this year.
Dalian, China-based HiSoft Technology International Ltd., which helps companies outsource software development, has jumped 166 percent. Gurgaon, India-based MakeMyTrip Ltd., India’s largest online travel company, has climbed 158 percent since its August IPO.
The last two Chinese IPOs this month, Beijing-based TAL Education Group, and Mecox Lane Ltd., the Shanghai-based online retailer, have also advanced at least 50 percent on their first day of trading.
Separately, Horizon Technology Finance Corp. of Farmington, Connecticut, priced 6.25 million shares at $16 each in its initial offering yesterday, according to a statement. The shares declined 2.6 percent to $15.59 today.