General Atlantic-backed Xiabu Xiabu targets $146m HK IPO

The company will sell 227.1 million shares at up HK$4.40-5.00 apiece, according to a regulatory filing. Pricing is scheduled to take place on December 11 with the stock expected to begin trading on December 17.

General Atlantic holds a 41.49% stake in Xiabu Xiabu, which will fall to 32.32% upon listing, while a smaller financial investor - MagiCapital Group - will see its holding fall from 4.41% to 3.46%. Kuang-Chi Ho, who founded the business in 1998 and opened its first restaurant in Beijing the following year, holds a 54.4% stake. This will be diluted to 42.68% following the IPO.

Xiabu Xiabu had 421 restaurants as of June 2014, up from 243 in 2011. Over half of its business still comes out of Beijing, although a degree of geographic diversification has been introduced in recent years and the restaurant network now encompasses Shanghai and Tianjin, as well as the provinces of Hebei, Liaoning, Jiangsu, Shandong, Shanxi and Henan.

The nature of Xiabu Xiabu's cuisine has allowed the business to scale up rapidly: hotpot is fairly standardized compared to most Chinese fare, and because diners do the cooking themselves centralized kitchens can be used with no need for chefs at each site. The company claims a 15.8% share of the Chinese fast casual dining market by revenue and 7.6% by restaurant count.

Actis invested RMB351 million (then $52 million) in Xiabu Xiabu in 2008, taking a 53.13% interest. General Atlantic acquired the Actis holding for $150 million in late 2012, although following negotiations with Ho, the private equity firm's stake in the business was adjusted to 44.79%.

In February 2013, MagiCapital committed $15 million for a 4.41% interest, which included the purchase of $10 million worth of shares from General Atlantic.

Xiabu Xiabu posted revenue of RMB1.89 billion ($30.6 billion) in 2013, up from RMB1.5 billion in 2012 and RMB997.2 million in 2011. Average spending per customer has risen from RMB35.2 in 2011 to RMB40.8 in 2013. Net profit for 2013 was RMB140.7 million, compared to RMB107.5 million in 2012 and RMB75.7 million in 2011.

China's catering services market was worth RMB2.6 billion in 2013 and is expected to reach RMB4.5 billion by 2018, according to Frost & Sullivan. The quick service share and casual dining shares of the market are 21.4% and 10.5%, respectively. They are projected to increase to 26.1% and 12.9% by 2018.

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• Topics
• Consumer
• Greater China
• Exits
• General Atlantic
• Consumer
• China
• Actis Capital
• IPO
• Exit