Morgan Stanley-backed Feihe files for Hong Kong IPO
Feihe, a China-based dairy products manufacturer backed by Morgan Stanley Private Equity Asia (MSPEA), has filed for an IPO in Hong Kong.
It is the third MSPEA portfolio company to initiate a listing in the past couple of weeks. Singapore-based remote controls manufacturer Home Controls International is also targeting a Hong Kong IPO, while AMTD International, a division of financial advisor AMTD Group, is planning a US offering.
Headquartered in Bejing, Feihe is China’s largest producer of infant milk formula and its second-most popular milk formula brand, according to Frost & Sullivan, with a domestic market share of 7.3% – including both Chinese and foreign brands – in 2018. The company positions its products as the best nutrition for Chinese babies, and claims to design its formula to closely simulate the composition of the breast milk from Chinese mothers.
Founded in 1962, Feihe mainly sells its products through a nationwide network of over 1,700 distributors, including maternity stores, supermarkets, and hypermarkets, representing more than 92,000 points of sale as of March 2019. The majority of its revenue – 52% for the year ended December 2018 – comes from the premium Astrobaby brand.
Overall revenue for the year came to RMB10.4 billion ($1.5 billion), up from RMB5.9 billion the year before. Over the same period, net profit grew from RMB1.2 billion to RMB2.2 billion.
Feihe went public in the US via a reverse takeover in 2003 and gained prominence for a brief period in 2008 as one of the few Chinese dairy companies not implicated in the melamine scandal. MSPEA took the company private in 2013, paying $147 million alongside management.
Financial details of the offering and expected use of the proceeds have not been announced, although media outlets have reported that Feihe expects to raise up to $1 billion. The company previously filed for a Hong Kong listing in 2017, but that application has expired.
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