Spring-backed Denox targets $46.8m Hong Kong offering

Spring Capital Asia holds a 10.7% stake in the business, having participated in a pre-IPO round of funding worth $23.1 million in February of this year. With Denox planning to sell 125 million shares for as much as HK$2.90 apiece, the private equity firm will be diluted to 8% on listing, according to a filing.

Founded in 2010, Denox was the first domestic manufacturer - and only the third globally - of plate-type DeNOx catalysts. It primarily serves China's coal-fired power generation industry, which is subject to nitrogen oxide emission reduction requirements. Frost & Sullivan estimates that Denox is the third-largest player domestically by production capacity, with a 17.5% market share.

Most power plants use honeycomb catalysts but Denox argues in its prospectus that the plate-type variety are better in terms of wearability and resistance to ash clogging and poisoning. Demand for plate-type catalysts grew 76.3% between 2009 and 2014 on a compound annual basis, and is expected to expand by 18% from 2014 to 2019.

Denox has benefited from the requirement that all coal-fired power plants built after 2012 feature DeNOx facilities, while existing plants were ordered to install these facilities by mid-2014. The company is eyeing future growth in catalysts for diesel-powered vehicles and a large portion of the proceeds from the IPO will be used for product development in this area.

Denox recorded revenue of RMB217.1 million ($34.2 million) in 2014, up from RMB126.9 million the previous year, while net profit increased from RMB32.7 million to RMB73.5 million.

Spring was founded in 2008 and has offices in Shanghai and Hong Kong. It is currently managing a $150 million China-focused fund.

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• Topics
• Greater China
• Cleantech
• Exits
• IPO
• China
• Exit
• Cleantech
• Spring Capital Asia