Thursday, October 14, 2010

Yashili IPO to Raise as Much as $458 million

WSJ reported:

Yashili International Holdings Ltd., a Chinese infant-formula maker in which U.S. investment firm Carlyle Group owns a stake, is planning to raise as much as US$458 million in a initial public offering this month on the Hong Kong Stock Exchange.

What disclosures are required in a Hong Kong prospectus? Will it include the following:

The Legal Weekly, an affiliate of the Legal Daily, a Chinese state-owned newspaper published by the country's Ministry of Justice, claims that Yashili, a Chinese dairy, repackaged 30 tonnes of contaminated milk powder as new product. Yashili, in which global private equity fund Carlyle Group owns a 17.3%  stake, emphatically denies the accusation.
Carlyle invested in tainted milk supplier Yashili a year ago.  What % return will they get from the looming IPO?  History shows Carlyle garnering 300% in China vs. their normal 30% annual returns.  China is beloved by private equity underwriters (PEU's).  It's easy to see why.