Nongfu Spring Seeks to Raise $1 Billion in Hong Kong IPO

The water and beverage maker seeks a public listing as its financials in the first quarter has been impacted.

Author: Anthony Russo   

The Chinese water and beverage maker Nongfu Spring is planning a Hong Kong IPO and aiming to raise up to $1 billion.

The company, which claims it's a top-three player in the bottled tea and juice market, will move towards a public listing despite its operations in the mainland markets taking a hit from Covid-19, as Reuters reported today. 

"During the COVID-19 outbreak, our sales of beverage products decreased compared to the same period in 2019," Nongfu said in its preliminary prospectus.

The company added, "According to the information currently available, our revenue and net profit decreased in the three months ended March 31, 2020, compared with the three months ended March 31, 2019." 

However, for the full year 2019, Nongfu generated 24 billion yuan in revenues, up 15% year-over-year on a profit of 4.95 billion yuan.

The sponsors are China Capital International Corp and Morgan Stanley with Freshfields Bruckhaus Deringer serving as the legal adviser on Nongfu's IPO.

The move follows the e-commerce giant Inc. (Nasdaq: JD) reportedly seeking to raise $2 million in its IPO in Hong Kong. Despite the city relaxing its listing rules, there has been just $2.45 billion worth of IPOs in 2020 compared with $4.27 billion in the same period in 2019, according to data from Refinitiv. Regarding follow-on deals and convertible bond transactions, there has been $12.81 billion worth of equity capital market activity in Hong Kong, the data showed.

Expect things to slowly heat up in the IPO market in Hong Kong, as JD and Nongfu will hope to launch its listings.