Haidilao Founders Sold Stake When Stock is Hot

(Bloomberg) -- While a lot of the follow-on offerings in Asia, and especially Australia, are from companies raising capital to weather the economic disruptions caused by the pandemic, in Hong Kong most of the recent deals have been shareholders monetizing their stakes.

The latest example? The founders of China's biggest hotpot chain, Haidilao International Holding Ltd., raised $201 million overnight through the sale of a roughly 0.9% stake. The sellers include units controlled by co-founder Zhang Yong and his wife Shu Ping. It's the first follow-on offering for the popular hotpot chain since its successful Hong Kong initial public offering in 2018. The stock has almost doubled since, making it an opportune time to sell.

Haidilao's shares tumbled earlier this year as the coronavirus outbreak in China forced the closure of its stores, but since the end of March they have staged a recovery and the company has said it will gradually reopen 85 stores in 15 Chinese cities.

Companies and their shareholders have raised $9.5 billion selling shares in Hong Kong since the start of the year, data compiled by Bloomberg show. Of that, $5.39 billion is from the sale of existing shares, while $4.23 billion has been raised through primary share placements, the data show. Since April the balance has shifted further: $2.41 billion has been raised by shareholders selling stakes, more than double the amount obtained by companies seeking funds.

No doubt a market recovery since a March 23 low has prompted shareholders to seize what may be a short market window, as uncertainties still abound on the economic repercussions of the coronavirus on the world economy. South Korea's SK E&S Co. Ltd. sold all of its remaining stake in China Gas Holdings in a massive $1.9 billion block trade on April 17.

The follow-on activity in Hong Kong stands in sharp contrast to that in Australia, where firms have raised a total of $8.1 billion since April 1 selling new shares, with no sales of existing stock.

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