Weilong is reportedly seeking to raise $500 million and is valued at $4.9 billion, both of which are nearly half that from a year ago
The company has maintained strong sales, but profitability has stalled, triggering a switch to foreign markets in search of new growth drivers
By Ken Lo
They say third time’s a charm and it certainly appears to be the case for Chinese spicy snack maker Weilong Delicious Global Holdings Ltd. , which finally received approval last month for a listing in Hong Kong after a troubled year-long effort and two previous failed attempts.
However, 12 months later there now appears a much reduced appetite among investors for its shares, with both its valuation and the amount it seeks to raise halving from levels a year ago.
So, what happened? It’s shrinking fortunes can be attributed to a list of woes including stalled profits despite rising sales, an over-reliance on third-party offline distributors, problems raising capital and the aforementioned delay in receiving approval for the Hong Kong IPO.
The troubles began in May last year when it submitted its first IPO prospectus with a purported plan to raise $1 billion, but failed to get approval within the prescribed six-month period. Its second application filed in November also failed.
Finally on June 27, the company’s listing was approved, with Morgan Stanley, CICC and UBS Group as its sponsors.
But it wasn’t just its repeated inability to secure approval for an IPO that has investors spooked. Weilong’s one and only round of pre-IPO fund-raising also encountered hiccups. Kicked off in May last year, the funding round attracted big names like Citic Private Equity Funds Management, Hillhouse Capital, Sequoia Capital China, Tencent Investment and Yunfeng Financial Group, securing an impressive valuation of 61 billion yuan ($9.1 billion).
But right from the beginning the process was plagued by severe delays due to its beleaguered IPO campaign and was not completed until May this year, with investors eventually forking out just 4.43 billion yuan in exchange for 13.5% of the company, bringing the company’s ...
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