An IPO in Hong Kong this month by milk producer China Huishan Dairy Holding puts the company’s chairman on track to formally become a new Chinese billionaire.
Going into the public offering, chairman and CEO Yang Kai of Shenyang directly and indirectly owned approximately seven billion shares in the company that are being valued at an expected range of HK$2.28-HK$2.67 each. At the midrange price of HK$2.475, the shares would be worth the equivalent of $2.2 billion.
According to the prospectus, Yang-controlled Champ Harvest and other existing shareholders are expected to sell a total of 874 million existing shares during the IPO.
China, buoyed by brisk economic growth, has been one of the world’s fastest-growing sources of new billionaires in the past decade. On the 2013 Forbes Billionaires List, China’s 122 members were second only to the United States. Forbes estimated last Sunday that the wealth of real estate developer Wang Jianlin has surpassed beverage producer Zong Qinghou’s, making Wang China’s richest man as of that date. Forbes Asia will soon publish the 2013 edition of the Forbes China Rich List.
China Huishan Dairy has the second-largest herd of dairy cows in China, the prospectus said, citing Frost & Sullivan. That includes 106,000 Holsteins and 6,200 Jerseys.
Dairy-related industries in China have been a source of controversy about product safety and business practices for years. Fonterra of New Zealand recalled contaminated milk power and Mead Johnson Nutrition MJN +1.19%,Abbott Laboratories ABT +0.32% and four others were fined for price fixing recently.
Norges Bank of Norway has subscribed for a 2.5% stake in the IPO, and Chinese milk producer Yili will hold a 1.1% stake. Bao Hua Investments, whose investors include Cofco (Beijing) Agricultural Industrial Equity Investment Fund, Louis Dreyfus Commodities Asia and Sumitomo Mitsui Banking, will own 0.9%.
Hong Kong billionaire Cheng Yu Tung also holds a minority stake in China Huishan and plans to cut its holding during the IPO.
The company is scheduled to list on Sept. 27 in Hong Kong.
Source: Forbes