Hot Pot Heats Up: The Sizzling Ipo You Don't Want To Miss

The hot pot IPO stock that is coming is from a Chinese chain that is going public on the Hong Kong exchange. The IPO signals the rise of the hot pot industry.

Chinese hotpot chain Haidilao raised nearly $1 billion in its IPO

Chinese hotpot chain Haidilao raised nearly $1 billion in its initial public offering (IPO) in Hong Kong in 2018. The company, which mainly serves spicy Sichuan-style hotpot, sold its shares at $2.27 each, giving it a valuation of about $12 billion.

Haidilao's IPO pricing was at the top of the indicated range, showing that investors were optimistic about the company's growth prospects, despite a number of food safety incidents in the past. The float came at a delicate time for Hong Kong, with the benchmark Hang Seng index falling 20% from its January peak amid Sino-U.S. trade tensions.

Haidilao, co-founded by former tractor factory worker Zhang Yong in 1994, had set a price range of HK$14.8 to HK$17.8 per share. The company declined to comment on the pricing. With the IPO, Haidilao aimed to raise up to $963 million (£739 million) to fund its international expansion and develop and implement new technology to improve food safety.

At the time of the IPO, Haidilao already operated in Japan, South Korea, the United States, and Singapore, and planned to expand into new markets, including the United Kingdom, Australia, Canada, and Malaysia. The company offered popular free services and entertainment, such as manicures and board games, to customers waiting to be seated.

The IPO attracted prominent firms, including Chinese investment house Hillhouse Capital Group and Morgan Stanley, as cornerstone investors. Together, they committed to buying $375 million worth of shares. Haidilao's shares started trading on the Hong Kong stock exchange on September 26, 2018.

The IPO was priced at the top of an indicated range

I searched for "what is the hot pot IPO stock is coming" and found that you may be referring to the upcoming initial public offering (IPO) of the Chinese hot pot restaurant chain, Haidilao Hot Pot. Here is a draft of 4 to 6 paragraphs based on the provided prompt:

Haidilao International Holding Ltd., the operator of the popular Chinese hot pot restaurant chain, set the price for its initial public offering in Hong Kong at the top end of a marketed range. The final IPO price is HK$17.80 (about $2.27) per share, according to a person with knowledge of the matter, who asked not to be identified as the details are private. That values the offering at about HK$8.66 billion ($1.1 billion) and the company at about $12 billion. The Beijing-based company and its shareholders offered 486 million shares at HK$14.80 to HK$17.80 each, according to terms for the deal.

Haidilao had confidentially filed for a Hong Kong IPO in May, and the offering could raise as much as $700 million, people familiar with the matter said at the time. The company delayed the deal in June, citing market conditions, before restarting it last month. The IPO was priced at the top of an indicated range, a sign of strong investor demand. The company plans to use the funds raised to expand its restaurant network globally and repay debt.

Founded in 1994, Haidilao has expanded to more than 350 restaurants across the world, including in the U.S., Japan, and Singapore. The chain is known for its spicy Sichuan-style hot pot and unique customer service, such as offering free manicures and snacks to waiting customers. Haidilao’s revenue rose 36 percent to 10.6 billion yuan ($1.5 billion) in the first half of 2018, according to its prospectus. Net income climbed 64 percent to 965 million yuan.

The pricing of Haidilao's IPO at the top of its indicated range demonstrates several key factors. Firstly, it reflects strong investor confidence in the company's business model and growth prospects. Haidilao's unique take on the traditional Chinese hot pot, coupled with its focus on customer service and experience, has clearly resonated with diners, leading to its successful expansion both domestically and internationally. Investors recognize the potential for continued growth, especially as the company expands into new markets.

Additionally, the IPO pricing underscores the resilience of the consumer discretionary sector, particularly in the restaurant industry. Despite concerns about economic headwinds and changing consumer trends, Haidilao's performance highlights the willingness of consumers to spend on dining experiences that offer something unique and memorable. The company's focus on providing a holistic experience, rather than simply a meal, has paid off, and investors are betting that this strategy will continue to drive foot traffic and spending.

The IPO will fund Haidilao's international expansion

Haidilao, co-founded by former tractor factory worker Zhang Yong in 1994, had set a price range of HK$14.8 to HK$17.8 per share. It could raise as much as $1.1 billion in total if a 15% "greenshoe", or over-allotment option, is exercised after the shares begin trading. The company's IPO attracted prominent firms, including Chinese investment house Hillhouse Capital Group and Morgan Stanley, who together committed to buying $375 million worth of shares.

Haidilao plans to use the proceeds from the IPO to fund its international expansion and to develop and implement new technology to better control food safety. The company already operates in Japan, South Korea, the United States, and Singapore and has more than 300 restaurants across China. The IPO will enable Haidilao to bring its unique brand of hotpot, known for its free services and entertainment such as manicures and board games for waiting customers, to a global audience.

The company's shares are expected to trade on the Hong Kong exchange

The Company's Shares Expected to Trade on the Hong Kong Exchange

The Chinese hotpot chain Haidilao is going public on the Hong Kong Stock Exchange. The company raised nearly $1 billion in its initial public offering (IPO) by pricing its shares at the top of an indicated range. This values the company at about $12 billion.

Haidilao, which mainly serves spicy Sichuan-style hotpot, is popular for the free services and entertainment such as manicures and board games that it offers to customers waiting to be seated. The company sold about 8% of its enlarged equity capital at $2.27 per share, with its shares expected to start trading on the Hong Kong Stock Exchange on September 26, 2018.

The IPO's top-of-range pricing indicates investors' optimism about Haidilao's growth prospects, despite a number of food safety incidents over the past two years. The company plans to use the proceeds from the IPO to fund its international expansion into markets including the United Kingdom and Canada, and to develop and implement new technology to better control food safety.

Haidilao joins a long list of companies seeking to go public in Hong Kong, including food delivery-to-ticketing services online platform Meituan Dianping, which debuted after a $4.2 billion IPO. Of the biggest 10 listings in Hong Kong in 2018, only one, Zhenro Properties, traded above its issue price.

The IPO comes at a delicate time for Hong Kong

Hong Kong's IPO market is highly dependent on companies based in mainland China, and the economic growth there has been "quite satisfactory," according to George Chan, global IPO leader at EY. However, official data shows that retail sales in China are growing more slowly, up only 3.7% in May 2024 compared to the previous year. This could impact the performance of consumer companies, which Chan expects to be among the near-term IPO beneficiaries.

Adding to the delicate situation, the proceeds from new listings in Hong Kong slumped 35% year-on-year in the first half of 2024, reaching a two-decade low. This decline has been attributed to various factors, including the U.S.-China trade war, which caused both stocks and the Chinese currency to tumble.

However, there are signs of improvement on the horizon. EY predicts that the Hong Kong IPO market will improve significantly over the next five years, starting in the second half of 2024. The Hang Seng Index is up more than 5% year-to-date, indicating a potential shift in momentum.

To enhance its competitiveness, Hong Kong is making efforts to modernise and digitalise its IPO settlement process. A new digital interface, FINI (Fast Interface for New Issuance), will be launched in October 2023, reducing the settlement period from five business days to two. This move is expected to free up capital and make Hong Kong a more attractive listing destination.

The future of Hong Kong's IPO market remains uncertain, but these developments indicate a potential for growth and recovery in the coming years.

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