A cow in a Chinese dairy farm. Photo: Bloomberg
China Youran Dairy Group raised $643 million in its Hong Kong initial public offering (IPO) by pricing its shares at the bottom of an indicated price range at HK$6.98 each, according to two sources with direct knowledge of the matter.
China Youran did not immediately respond to a request for comment. The sources could not be named as the information was not yet public.
The company had flagged its shares would be priced between $HK6.98 to $HK8.66 each, according to regulatory filings when the deal launched on Monday.
At the top of that range, Youran would have raised $800m.
The demand from investors was weaker than anticipated because the dairy industry was not seen as a hot sector, according to one source with direct knowledge of the matter who did not have permission to speak to media.
China Youran, backed by private equity firm PAG, was spun off from Inner Mongolia Yili Industrial Group.
It bought two farming hubs in Ying and Yutian counties for NZ$513 million ($368.7 million) owned by New Zealand’s Fonterra last year.
China is the world’s third-largest milk producer, but last year’s 34 million tonnes of output only met about 70% of domestic needs.
Just over 200 new Chinese dairy farm projects were announced last year, according to consultancy Beijing Orient Dairy.