Nirvana Asia Ltd, headed for an initial public offering (IPO) on the Hong Kong Stock Exchange (Dec 17), could see a strong debut as its IPO shares have been more than 50 times over-subscribed.
The Malaysia-based integrated funeral services company said the shares were “very significantly over-subscribed” at 51.7 times the number of shares available for subscription, according to the South China Morning Post.
The offer price has been fixed at HK$3.00 a share, at the bottom of its indicative range between HK$3.00 and HK$3.38. At that offer price, the IPO is set to raise HK$1.91 billion ($246 million).
The offer price also indicated that the company would be marketed at 17.8 times its 2015 forecast earnings.
CIMB Investment Bank Bhd, UBS AG and DBS are the lead banks for the exercise.
Nirvana will be the first foreign company, beyond the Greater China region, to list in Hong Kong in the past 12 months.
The company said that 40 per cent of the proceeds, or HK$763 million, would be used to establish new cemeteries, columbarium facilities and funeral homes in new markets through greenfield projects. The company tried to enter the Cambodian funeral services market in 2008 but withdrew the plan.
About one fourth of the proceeds, or HK$477 million, would be used for increasing the capacity of the company’s existing cemeteries and other facilities through land acquisitions and new construction.
The company said (in the filing) that it would target development in China after entering into a memorandum of understanding this year with a mainland cemetery operator; and was considering the development of land in Guangdong province.
Another 25 per cent of the IPO funds will be used to acquire existing death-care-services providers in Asia, including Malaysia, mainland China and Hong Kong.
According to Finance Asia, Beijing-based insurer Taikang Life Insurance and private equity firm Viewfinder were the cornerstones investors, each pledging HK$232.5 million ($30 million) in the company.
Shanghai-based funeral firm Fu Shou Yuan International Group was listed in Hong Kong last December in a $215 million IPO nearly 700 times oversubscribed. Its share price jumped a whopping 44.7 per cent at its debut on December 19, 2013.
Nirvana is going to the market, at a discount when compared to to Fu Shou Yuan but is valued similarly with the Taiwanese cemetery operator Lung Yen Life Service, Finance Asia reported. Fu Shou Yuan was last traded at HK$3.89 while Lung Yen was traded at TW$95.70.