CHINA Youran Dairy Group is aiming to raise up to US$800 million in its Hong Kong initial public offering (IPO) by pricing its shares at between HK$6.98 (US$0.90) to HK$8.66 each, according to regulatory filings yesterday.

The dairy company, backed by Hong Kong-based private equity firm PGA, will finalize the share price Thursday before listing on the Hong Kong stock exchange June 18, the filings showed.

At the top of the range, the IPO will value China Youran at US$4.2 billion. The company plans to sell 715.43 million shares, with an option to sell a further 107.3 million shares.

The deal includes just two cornerstone investors, Citic Prudential and Harvest Private Wealth, which have subscribed for a combined 6.94 percent of the shares on offer.

The small cornerstone stake is unusual for a Hong Kong IPO, where those investors typically lock in a higher percentage to ensure they get shares in the deal if the IPO is oversubscribed.

CARsgen Therapeutics Holdings, which launched its Hong Kong IPO of up to US$400 million yesterday, has cornerstone investors for a stake of up to 64 percent, according to its filings.

In its prospectus, China Youran said it would use 75 percent of the funds raised to build and buy new dairy farms, 15 percent to buy dairy cattle stock and the remainder for working capital.

Founded in 1984, China Youran Dairy produces and sells fresh milk and engages in related animal farming activities in China.

It used to be a subsidiary of dairy giant Inner Mongolia Yili Industrial Group Co. until PAG invested in 2015. The firm recorded a net profit of 1.54 billion yuan (US$241 million) in 2020, up from 801.9 million yuan in the previous year, according to its prospectus. (SD-Agencies)