China’s beverage and snack food producer, Dali Foods Group Co., has raised US$1.15 billion through an initial public offering (IPO) in Hong Kong on November 13, Bloomberg reports.

 

Although Dali’s brands are not standouts in China’s top markets, being more popular in second and third tier cities, the maker of “Daliyuan” cakes and “Copico” brand potato chips has a more diversified portfolio of products than its main rivals, which cover products including bread, cakes, chips, fries, biscuits, herbal teas, milk beverages, and energy drinks.

 

The company priced 1.69 billion shares at the lower end of its pricing range of between HK$5 and HK$6.15, at HK $5.25 (US$0.68) each, with the company’s two bookrunners, Bank of America Merrill Lynch and Morgan Stanley advising Dali to price conservatively in order to attract the standard of investor the company was seeking. Three cornerstone investors including a unit of Central Huijin Investment Ltd. agreed to the purchase of $305 million in shares through the offering according to the prospectus, agreeing to hold the shares for a minimum six months in return for guaranteed and early allocation.

 

The value of China’s snack food market is forecast to skyrocket by 72% over the five years between 2014 and 2019 to a value of 598.6 billion yuan (US$94 billion), according to data by Frost & Sullivan noted in Dali’s stock exchange statement, a sign of promise for the company and its new investors.

 

Dali will use the funds raised through the offering to increase production, to align the company with China’s strategy of re-balancing its economy toward a higher level of domestic output.

 

 

Dali’s IPO brings the total value of Hong Kong IPOs to date for the year to US$27.7 billion – the highest value for an 11-month period since 2010.