Haidilao to tap demand for Chinese hotpot with up to $700 mln IPO -sources

Yihai International Holding

09/04/2018 11:19

* Goldman, CMB Int'l tapped as HK IPO's joint sponsors
-sources
    * Plans to raise $600 mln-$700 mln, likely in H2 2018
-sources
    * Haidilao's domestic rivals are also eyeing overseas
expansion

    By Julie  Zhu and Fiona Lau
    HONG KONG, April 9 (Reuters) - Sichuan Haidilao Catering,
one of China's most popular hotpot chains, is planning to raise
$600 million to $700 million in a Hong Kong initial public
offering in a push to take the brand global, said three people
with knowledge of the transaction. 
    Haidilao, which mainly serves spicy Sichuan style hotpot and
is popular for the free services and entertainment such as
manicures and board games offered to waiting customers, has
tapped Goldman Sachs  GS.N  and CMB International (CMBI) as
joint sponsors for the proposed IPO, two of the people said. The
IPO could come in the second half of the year, they said. 
    The planned listing comes as the Beijing-based restaurant
operator looks to further expand at home and boost its network
globally to attract foreign consumers to the nation's hotpot
cuisine. Part of the proceeds to be raised will be used to
finance its expansion, said one person.
    Haidilao's Chief Strategy Officer Zhou Zhaocheng said in an
email to Reuters that the company has "no comment on market
speculation". Goldman declined to comment, while CMBI didn't
respond to requests for comment.    
    Co-founded by former tractor factory worker Zhang Yong in
1994, Haidilao has grown into China's leading hotpot chain with
about 190 stores across the country, and has already entered
overseas markets including Singapore, Los Angeles, Seoul and
Tokyo, according to its website.
    The company, whose name originates from a mahjong term in
Sichuan province which literally means fortune, is widely known
for its focus on attentive and creative customers services, a
rare emphasis point for many Chinese catering firms targeting
the mass market. That also helped Haidilao become a case study
at the Harvard Business School in 2011. 
    Betting on the growing lure of Chinese cuisine worldwide,
several of Haidilao's domestic rivals are also eyeing overseas
expansion, including Little Sheep, another hotpot chain,
controlled by Yum China Holdings  YUMC.N , and Best Food Holding
 1488.HK , the catering and retail arm of private equity firm
Hony Capital.  urn:newsml:reuters.com:*:nL3N1JO27D
    Details of co-founder and chairman Zhang's stake after the
IPO or the company's valuation could not be ascertained.
    Zhang had expected Haidilao's revenue to reach 10 billion
yuan ($1.58 billion) in 2017 and said he had no plans to list
the firm on domestic or overseas bourses, according to a
Bloomberg report last year. 
    Yihai International Holding Ltd  1579.HK , a maker of hotpot
soups and sauce condiments, was spun off from Haidilao and went
public in Hong Kong in 2016. The unit, controlled by Zhang and
another Haidilao co-founder, has a market capitalization of
around HK$13.2 billion ($1.68 billion). 
    Haidilao has suffered setbacks. An undercover news report by
a domestic newspaper exposed a food hygiene scandal at two of
its Beijing restaurants last year. And one of its outlets in
Singapore was suspended for two weeks earlier this year for
violating hygiene standards, Singapore media reported.
    The company acted swiftly after the hygiene issues cropped
up by acknowledging them, and started to offer live streams from
its kitchens in the Chinese capital.     
($1 = 7.8493 Hong Kong dollars)
($1 = 6.3093 Chinese yuan renminbi)

 (Reporting by Julie Zhu and Fiona Lau of IFR
Editing by Muralikumar Anantharaman)
 ((julie.zhu1@thomsonreuters.com; +852 2843 6519; Reuters
Messaging: julie.zhu1.thomsonreuters.com@reuters.net))