China National Gold Group Gold Jewellery Co.,Ltd, a subsidiary of state-owned China Gold Group, has filed a prospectus with The Stock Exchange of Shanghai looking to raise 898 million yuan ($139 million) in an initial public offering (IPO).
The company, which kicked off its subscription exercise on Wednesday, plans to offer up to 180 million common shares at a price of 4.99 yuan ($0.77) apiece.
State-backed CITIC Group’s brokerage unit CITIC Securities is the principal underwriter for the deal. CITIC Securities is also an investor as it had teamed up with JD.com, Yuexiu Financial Holdings’ industrial fund, Industrial Bank’s Industrial Asset Management, and others to make an undisclosed strategic investment in the company in 2017.
With the IPO proceeds, National Gold Group will build a flagship store and R&D centre, besides establishing an information platform. It plans to use the rest of the proceeds for capital replenishment.
China Gold Group, which is managed by the Assets Supervision and Administration Commission of the State Council, set up China National Gold Group Gold Jewellery in 2010 in Beijing to develop its gold business in the country. The subsidiary runs gold and jewellery supply chain businesses covering mining, refinement, design, manufacturing, and distribution.
The company’s sales earnings derive from its direct-sales networks including wholly-owned retail stores, key accounts, banks, e-commerce channels, and franchise stores. As of June 30, 2020, National Gold Group operated 80 fully-owned stores and 2,688 franchise units. It plans to newly launch 12 proprietary stores in the coming two to three years, according to its prospectus.
National Gold Group clocked a net profit of 141 million yuan ($22 million) in the first half of 2020, a 36.82% year-on-year growth. During the same period, the company managed an aggregate of 9.4 billion yuan ($1.5 billion) in assets under management.
Following the IPO, China Gold Group will remain the controlling shareholder in National Gold Group with 38.5% stake. Beijing Caifeng Jinxin Investment will keep as the second-largest shareholder holding 8.8% equity interest, followed by CITIC Securities with 6.2% stake.