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 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, and Best Food Holding , the catering and retail arm of private equity firm Hony Capital.
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, 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.