Hong Kong sportswear and athletic footwear manufacturer Li Ning will price its IPO at HK$2.15 a share, the high end of the expected range. In spite of the premium price, fans of the brand are vying for their chance at a piece of the company. The IPO is so hot that the company would have to provide 10 times the number of shares allotted to institutional investors to meet demand and 130 times the allotment for retail investors.
The company was founded by Olympic gymnast and gold medal winner Li Ning, the current chairman, and is expected to raise HK$530 million at the given price. They will sell 246.5 million shares, with 24.7 million shares originally allotted to retail investors. With demand so strong, the company has proposed increasing this allotment by 50%.
According to the prospectus, HK$210 million will be used on distribution improvements, brand promotion and marketing. A local paper said that Li Nings current distribution strategy focuses on secondary cities to avoid large competitors like Nike and adidas, but the brand has built a tremendous following by sponsoring Olympic athletes and Chinese national teams year after year.
Li Ning has also set aside HK$40 million of the proceeds for strategic acquisitions, although no targets have been identified. Other destinations for the new capital include R&D, new management information systems, new licenses, and general working capital.
