Yunfeng-Backed Condiment Firm Yihai Completes $111M Hong Kong IPO

Chinese condiment maker Yihai International Holding, in which Yunfeng Capital owns a 6% interest, has completed an initial public offering in Hong Kong to raise around HK$861 million (US$111 million).

Yihai, a unit span off from parent company popular Sichuan hot pot chain Haidilao Group, sold 260 million shares at the upper end of its predicative price of HK$3.3 a piece. Its shares closed down at HK$3.25 at the end of trading yesterday.

The company plans to use the IPO proceeds to construct a production facility in Hebei province and on potential acquisitions.

Yihai, as a condiment maker, has a simple business model and scale. In comparison, restaurant operator Haidilao is labor intensive with complicated financials, higher tax and regulatory risks, making it a less attractive story for the capital markets.

As Haidilao’s sole supplier of hot pot soup sauce, Yihai is China’s second largest hot pot condiment maker, with revenues of RMB847 million and net profit of RMB125 million in 2015.

Aside from supplying hot pot condiment to Haidilao, which contributed 54% to its overall revenues, Yihao also retails its various products in 6,000 supermarkets in China and via e-commerce channels to 11 countries and regions.

Haidilao is one of China’s largest hot pot restaurant chains, operating 142 outlets in the country at the end of 2015.

Founders of Haidilao, Zhang Yong and his wife Shu Ping, owns 47.76% of Yihai. Aside from Yunfeng’s 6% stake, the New Hope Group also owns a 2% interest in the company.

It’s unclear when and how Yunfeng Capital, which is co-founded by Alibaba Group Holding Ltd’s chairman Jack Ma, invested in Yihao.

Caishen.Co - Primary Data for China Secondary Investment and Stock Markets
Caishen.Co - Primary Data for China Secondary Investment and Stock Markets