Procter & Gamble – Hillhouse’s Newest IPO Returns 2,000% and Creates a Billionaire
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Pan Dong was a instructor at a college in Guangzhou, China. Quick ahead 20 years, she’s now one of many nation’s richest girls.
The 55-year-old is Blue Moon Group Holdings Ltd.’s chairman and spouse of its founder, Luo Qiuping. The cleaning soap maker, which lately has raced previous international manufacturers together with Unilever Plc and Procter & Gamble Co. to turn into China’s high liquid-laundry detergent supplier, raised $1.three billion in Hong Kong’s greatest client preliminary public providing of the yr. It priced on the high finish of its marketed vary final week.
With its shares opening up 16% on their Wednesday debut, Pan’s 77% stake in Blue Moon is now worth $8.Eight billion, in response to the Bloomberg Billionaires Index. An organization spokesman didn’t reply to a request for remark.
A telephone name jumpstarted the model’s enlargement and led to Pan’s riches.
When Pan and her husband rang Zhang Lei of Hillhouse Capital Administration Ltd. a couple of decade in the past to inform him they’d developed one among China’s first liquid detergents, the corporate was a secure cash cow, nevertheless it was small. Zhang inspired them to develop that market, in response to a 2015 interview with the New York Instances, and Hillhouse grew to become their first exterior investor.
After initially incurring losses because of greater product-development prices in an more and more aggressive house, the guess paid off. The cleaning soap maker grew to become worthwhile once more, and in 2020 it received one other enhance because the coronavirus pandemic pushed folks to purchase cleansing and disinfecting merchandise.
“Blue Moon is a classic example of how a local brand beats multinationals in emerging markets,” Hillhouse’s Zhang mentioned in his e-book “The Value,” referring to the corporate’s push into liquid detergents.
His hedge fund’s guess has proved profitable, too. Hillhouse invested a complete of $46 million within the detergent maker’s two funding rounds and its stake was worth $988 million at Blue Moon’s opening price, a 21-fold return, as per Bloomberg calculations. Entities linked to the agency will subscribe to no less than 34.5 million shares within the IPO to keep away from diluting the stake, the prospectus indicated.
Generally known as China’s P&G, Blue Moon’s income grew to HK$7 billion ($909 million) final yr and earnings nearly doubled to HK$1.1 billion, in response to the prospectus. The Covid-19 outbreak that led to lockdowns and shut many bodily shops despatched revenue up 39% within the first six months of 2020, with nearly 60% of the gross sales coming from on-line channels.
Pan, a Canadian and Hong Kong citizen, graduated from Wuhan College with a grasp’s diploma in natural chemistry in 1987 and labored as a instructor at one other Chinese language faculty for the next decade. She joined Blue Moon in 1994, two years after the launch of its first branded cleansing product, and later acquired stakes from Luo and his father to “better deploy” her administration and technological data and assist the corporate seize tax advantages for mainland enterprises with international funding, in response to the prospectus.
With China being one of many first nations to handle to regulate the coronavirus outbreak, traders have been favoring stocks powered by its recovering client trade. The retail portion of the Blue Moon IPO was greater than 300 instances oversubscribed, and different listings of firms linked to the sector have performed properly lately. Shares of bottled-water maker Nongfu Spring Co. have doubled since their September debut, and on-line drug retailer JD Well being Worldwide Inc. jumped greater than 55% on its first day of buying and selling earlier this month.
Michael Kan, an funding director of Centaline Securities, notes that the exuberance of Hong Kong’s IPO market is a trigger for concern as some merchants are focusing an excessive amount of on short-term bets. That mentioned, he points to Hillhouse’s “excellent” observe report in the long term.
“The fund house always helps the companies it has invested in grow their businesses with appropriate strategies and cooperate with the right partners to explore new frontiers,” he mentioned, including that he’ll keep watch over Blue Moon’s outcomes.
— With help by Julia Fioretti