Dali Foods Seeks Up to $1.34 Billion in Hong Kong IPO

Dali Foods Group Co., a Chinese snack and beverage producer, is seeking to raise as much as $1.34 billion in a Hong Kong initial public offering.

The company, which sells “Daliyuan” cakes and “Copico” brand potato chips, is offering 1.69 billion shares at HK$5 to HK$6.15 each, according to terms for the deal obtained by Bloomberg. Three cornerstone investors including Arisaig Partners have agreed to buy about $305 million of stock in the offering, the terms show.

Dali Foods’s offering adds to the $26.2 billion raised from first-time share sales in Hong Kong this year, up from $18 billion during the same period in 2014, data compiled by Bloomberg show. China International Capital Corp., the first Sino-foreign investment bank, raised $811 million last week after pricing its IPO in the city at the top end of a marketed range, people with knowledge of the matter said Oct. 31.

Arisaig Partners agreed to buy $80 million of stock in the offering, while JIC Dessert Laboratory Ltd. will purchase the equivalent of 950 million yuan ($150 million), according to the terms. Longbow Securities Ltd. committed to invest $75 million, the terms show. Such cornerstone investors typically agree to hold on to their shares for six months in return for early, guaranteed allocation.

Dali Foods, which is based in Hui’an in eastern China’s Fujian province, plans to price the share sale Nov. 13 and start trading Nov. 20, the terms show. Bank of America Corp. and Morgan Stanley are joint sponsors and joint global coordinators of the offering.

China’s snack food market is expected to surge 72 percent from last year to 598.6 billion yuan in 2019, according to the company’s stock exchange statement which cited Frost & Sullivan. The retail sales value of China’s non-alcoholic beverage market rose 16.7% to 962.6 billion in 2014 from 2009.

The company reported net profit in the six months ended June this year jumped 47 percent to 1.52 billion yuan from a year earlier, according to the statement. Sales of the food and beverage products accounted for 55 percent and 46 percent of the total revenue respectively.

Dali Foods started exporting products to North America in second quarter of 2015 and plans to expand sales in overseas market such as Southeast Asia, according to the statement.

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