Chinese raw milk producer YuanShengTai Dairy Farm (YST) has raised $425m through initial public offering (IPO) in Hong Kong.
Headquartered in Qiqihar, China, YST produces and sells premium raw milk to dairy products manufacturers, including China Mengniu Dairy, Inner Mongolia Yili Industrial and Bright Dairy & Food.
The company offered 1.22 billion shares in the IPO with pricing each share at HK$2.70, according to sources familiar with the matter.
Credit Suisse and Macquarie Group acted as joint global coordinators and joint bookrunners of the IPO.
Mengniu has purchased $60m worth of YST stock, as a cornerstone investor.
YST plans to use 75% of the proceeds to establish five new farms, which are expected to be completed by 2015-end, while the remaining 15% will be used to upstream its operations.
As part of the expansion, the company plans to spend $226.5m in the new farms to increase its herd size to 100,000 by 2017 from around 39,000 in June 2013, reported Reuters.
In the first half of 2013, YST recorded an 18% year-over-year growth in revenues to CNY385.1m, while earnings declined 6.1% to CNY99.6m.
This IPO comes after Chinese dairy firm Liaoning Huishan Dairy gained approval from the Hong Kong Stock Exchange to raise $1bn through IPO, in an effort to increase the size of its cattle herd and boost production.
Last week, the Chinese government has announced its plans to relax its one-child policy, a move which would see a surge in demand for infant milk formula products.
Image: YuanShengTai Dairy plans to use the proceeds from IPO to upstream its operations. Photo courtesy of Alessandro Paiva.