Junlebao Dairy Weighs Dual Listing in Hong Kong, Chinese Mainland

(Bloomberg) — Junlebao Dairy Co. is weighing a dual listing in the Chinese mainland and Hong Kong, according to people familiar with the matter.

The dairy product maker based in China’s Hebei province could seek at least $700 million in a Hong Kong share sale, one of the people said. Junlebao had previously considered a domestic listing but has since begun exploring the option of a Hong Kong offering either before or after a share sale on the mainland, the people said, asking not to be identified as the information is not public.

Deliberations on the share sale plans are at an early stage and the company could decide not to proceed, the people said.

A listing would follow the sale last year by China Mengniu Dairy Co.’s 51% controlling stake in Junlebao for over 4 billion yuan ($574 million). Private equity investors Ping An Capital, Primavera Capital and Sequoia Capital are among the company’s backers.

A representative for Junlebao said they had no comment on the matter.

Founded in 1995, Junlebao produces yogurt, liquid milk and infant milk powder formula, according to its website. The company contributed 75.5 million yuan to Mengniu’s net income during the first half of 2019, compared to 79 million yuan over the same period in the previous year, according to Mengniu’s 2019 interim report.

Junlebao produced 75,000 tons of milk powder in 2019, a 62% year-on-year increase, the company announced in January. It is competing with domestic players such as China Feihe Ltd. as well as large multinationals Nestle SA and Danone for China’s huge retail market in infant milk powder, which accounted for 175 billion yuan in sales last year, according to Bloomberg Intelligence.

First-time share sales by Chinese companies this year have hit a 10-year high, raising nearly $54 billion through initial public offerings and second listings, the most since 2010, data compiled by Bloomberg show.

Junlebao would join a growing cohort of companies with shares traded on the Chinese mainland and Hong Kong. Shenzhen-listed Hangzhou Tigermed Consulting Co. is gauging investor demand this week for a Hong Kong listing, while Ant Group is weighing going public in Shanghai and Hong Kong simultaneously, Bloomberg News has reported.

Contact editor Yang Ge (geyang@caixin.com)