Lianhua Supermarket Holdings Co Ltd has raised HK$581 million (US$74.49 million) from its initial public offering in Hong Kong, as overseas investors lapped up shares in the largest grocery chain operator on China's mainland.
Shanghai-based Lianhua has priced its shares at HK$3.875 each, the higher end of the previous price range of between HK$3.17 and HK$4.17.
Of the 150 million IPO shares, or 26.5 percent of the company's total, the 10 percent slated for Hong Kong investors was oversubscribed 80-fold. The remaining shares, which are only for global investors, were 10 times oversubscribed, the sources said.
"The warm response to Lianhua's IPO shares is due to a promising and fast growing retail sector on the mainland," said an unidentified official with BNP Paribas Peregrine, one of the two major underwriters. The other is HSBC Holdings Plc.
Lianhua's share trading will start on Friday.
The company will use the proceeds to finance its nation-wide expansion. It will invest about HK$132 million to set up hypermarkets and supermarkets across China. It has planned about HK$75.5 million for convenience stores, HK$47.2 million for its nationwide information system and another HK$180 million to perfect its logistics system, Lianhua said earlier in a statement.
By the end of last year, Lianhua boosted its store fleet to 1,921 and posted sales of 18.3 billion yuan (US$2.2 billion), 29.79 percent higher than a year ago.
With China's retail chain business expected to be upbeat, Lianhua is planning to have some 8,000 shops around the country in five years with annual sales totaling 80 billion yuan.
(Shanghai Daily June 24, 2003)
