Chinese Dairy Firms Aim to Raise up to $1.3 Million in Hong Kong IPOs
Chinese dairy consumption is expected to increase by 38% over the next eight years and two dairy companies are set to launch multi-million dollar initial public offerings (IPOs) to tap into investor demand for access to the market. China Shengmu, an organic milk producer based in Inner Mongolia has hired BOC International and Goldman Sachs Group Inc. to handle their IPO that will raise between US$500 million and US$800 million. The company applied for listing approval in Hong Kong and once approved, the IPO could happen as early as June. A second company, Affinity Equity Partners backed by Beijing Sunlon is planning a Hong Kong IPO for the second half of 2014 which is expected to raise between US$300 million and US$500 million. The raised capital would help the two companies gain market share in China as the government is encouraging consolidation within the industry in order to compete with foreign suppliers and to clean up the industry after a series of food safety and contamination scandals. Last year China Huishan Dairy Holdings Co. raised US$1.5 billion through its IPO, and YuanShengTai Dairy Farm raised US$452 million.
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