Taipei, A subsidiary of conglomerate Namchow Holding Co. is expected to become the first Taiwanese food firm to launch an initial public offering in China at a time when many local enterprises are eyeing relatively high valuations in the China equity market.
Namchow Holding held a special general meeting on Friday, where it secured approval from shareholders to take Namchow Food Group (Shanghai) Co. public on the Shanghai Stock Exchange.
Namchow Shanghai is planning to submit an IPO application to the China Securities Regulatory Commission (CSRC) in the third quarter of this year. Market analysts said the IPO is likely to take place at the end of the year or early next year at the earliest, making Namchow Shanghai the first Taiwanese-owned food firm to raise funds in China.
Expectations that the IPO will proceed quickly haves been boosted, in particular after the CSRC gave approval Thursday for Foxconn Industrial Internet Co. Ltd. (FII), an Internet focused unit of Hon Hai Precision Industry Co., to raise 27 billion Chinese yuan (US$4.3 billion) from an IPO on the Shanghai stock exchange.
The greenlight took FII just 36 days to obtain after the IPO application was filed with the CSRC on Feb. 1. The speedy review of the FII application represents a sharp departure from the commission's usual practice of often taking more than a year to review an IPO plan. The FII IPO is likely to be launched by the end of this month.
However, lawmakers in Taiwan have expressed concern that other Taiwanese companies could be encouraged to list in China by the CSRC's speedy approval of the FII application.
Ker Chien-ming (???), ruling Democratic Progressive Party legislative caucus whip, said that the Taiwan government should take steps to persuade enterprises to stay in Taiwan.
Namchow Holding said it has been preparing for the IPO of the Shanghai unit for about one year, and since China is opening its doors to allow more listings on its equity market, the subsidiary's listing is expected to proceed smoothly as one of the Chinese yuan-denominated A shares.
Chen Fei-lung (???), chairman of Namchow Holding, said the company has operated in the China market for 21 years and the planned IPO aims to raise funds to further expand operations there while looking to international markets.
Currently, Namchow Shanghai, which is capitalized at 360 million Chinese yuan, has focused its business on edible oil and frozen dough, while operating several restaurant brands.
Chen said as long as the IPO is successful, Namchow Shanghai is expected to see its market visibility improve, which will help it raise more funds and attract talent to work for it.
In 2017, Namchow Holding generated NT$17.2 billion in consolidated sales, up 5.42 percent from a year earlier, with its China operations contributing about NT$7 billion.
The parent company aims to boost its revenue to NT$20 billion by 2020 with sales from China expected to increase to NT$10 billion.
Source: Focus Taiwan News Channel