Zhejiang Huakang Pharmaceutical Co., Ltd, which specialises in the manufacture of polyols and starch sugar used in the food ingredient industry, has kicked off the subscription exercise for its initial public offering (IPO) in Shanghai looking to raise 1.5 billion yuan ($233 million).
The company, which filed its IPO prospectus on January 27, is offering 29.14 million common shares at 51.63 yuan ($7.99) apiece. The shares have been oversubscribed 8,688 times, as per a filing with the bourse.
Huakang plans to allocate the majority of the IPO proceeds to its pipeline programmes, including a technology centre, and green energy management systems. It expects to leverage the rest to refuel operating funds.
Credit Suisse Founder Securities, a joint venture securities firm established by Switzerland-based Credit Suisse AG and Chinese Founder Securities in 2008, is the principal underwriter for the deal.
Located in East China’s Zhejiang province, Huakang manufactures and distributes functional polyol and sugar products. Since its inception in 2001, it has built versatile pipelines spanning somaltolitol, maltitol, malt syrup, crystalline fructose, and isomaltolitol.
It counts an array of leading food and beverage brands as its top clients including Mars, Mondelēz International, Ferreo Rocher, Coca-Cola, Pepsi-Cola, Nongfu Spring, and Mengniu.
According to its prospectus, its annual revenues between 2017 and 2019 stood at 925 million yuan ($143 million) in 2017, 1.4 billion yuan ($217 million) in 2018, and 1.5 billion yuan ($233 million) in 2019. Of late, in the first half of 2020, it clocked 707 million yuan ($109 million) in sales earnings.
Following the IPO, Huakang president Deshui Chen will remain the largest shareholder in Huakang with a direct 15.9% stake, down 5.29%. Its majority shareholders include Hangzhou Tangchun Investment (3.26%), internet-focused Harmony Investment (2.75%), and Shanghai-listed energy services operator HY Energy (1.71%).
HY Energy had initially backed Huakang in 2018, while Harmony Investment had exclusively made an undivulged strategic investment in Huakang in 2019.