Bottled water company Nongfu Springs raises over US$1bn in its initial public offering

CHINA – Nongfu Spring, a bottled water company, has raised more than US$1 billion in its initial public offering (IPO) in Hong Kong, allegedly making its founder Zhong Shanshan the country’s third-richest man.

Demands for shares were oversubscribed 1,148 times ahead of its Hong Kong debut on Tuesday, as more than 700,000 small independent investors committed HKD 670.8 billion (US$86 billion) for the retail portion of Nongfu’s share offering.

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Shares were priced at HKD 21.50 (US$2.77) but during its Hong Kong debut, the company witnessed them soar as high as 85% up to HKD 39.80 (US$5.14). The trading session ended with shares priced at HKD 33.1 (US$4.12), around 54% higher than its initial issue price.

Five cornerstone investors took stock in the deal, led by fund managers Fidelity, hedge fund Coatue and Singapore wealth fund GIC. Fidelity and GIC bought nearly 30% of Nongfu’s offering. 

388.2 million shares were sold during Nongfu Spring’s IPO deal, marking one of the largest this year in Hong Kong. According to sources, it was the third most traded stock on the Hong Kong market following service apps provider Meituan and Tencent.

Reports suggest that investors were keen to buy stocks on hopes that the company will capitalise on a rising demand for healthier drinks in China.

Founded in 1996 Nongfu Spring is based in Hangzhou and its net worth is said to be more than US$50 billion, according to Bloomberg data.

Zhong reportedly holds more than 84% of the brand’s share capital. He also holds a 75% stake in Beijing Wantai Pharmacy Enterprise, a vaccine and test-kit maker in China.

As well as red-capped bottled water, Nongu Spring also produces packaged drinks such as tea, coffee and fruit juices.

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The company’s slogan, which translates as “Nongfu tastes a bit sweet” is well known in China and the business has expanded to produce energy drinks and vitamin waters. In 2018, the company was estimated to control a 26% share of China’s US$30bn bottled water sector, according to Davie Consulting. Prior to Nongfu Spring’s listing in Hong Kong his fortune stood at just under US$19bn.

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