Asia's first theme park IPO raises $316m

China's Haichang Holdings priced shares in the middle of its indicative range and met with solid demand as global investors sought greater exposure to domestic tourism in China.

Chinese theme park operator Haichang Holdings has raised $316 million from an initial public offering of shares.

The company priced 1 billion shares at HK$2.45 per share late on Saturday, slightly above the middle of its initial price range of HK$2.18 and HK$2.68. Based on the term sheet, the total amount raised could rise to $363 million if a greenshoe option is exercised.

Demand for Haichang – China’s version of Sea World – was robust, particularly amongst Asian and European long-only funds, sovereign wealth funds and hedge funds, a banker close to the deal told FinanceAsia. He also noted some interest from US institutions following a global roadshow that began in late February.

The theme park operator – the first to list in Asia – appealed to investors looking to gain exposure to China’s boom in domestic tourism, the banker said.

“It’s unique. It’s a domestic tourism play, cash-generative, [plus it plans to use] proceeds on the two new parks,” he said.

Haichang will use half of the proceeds, or roughly $158 million, towards developing the Haichang Polar Ocean World in Shanghai, while another 40%, or approximately $126 million, will be used to help build the Sanya Haitang Bay Dream World. The remaining 10% will be employed as working capital and for other general corporate purposes.

Haichang has theme parks in Dalian, Qingdao, Tianjin, Yantai, Wuhan and Chengdu. The company also plans to acquire Dalian Discoveryland and Chongqing Caribbean Water Park by the end of this year.

The company was the largest marine park operator in China in 2012, attracting 7.2 million visitors  – more than twice the number of visitors hosted by its closest competitor.

Shares in Sea World – the closest comparable company to Haichang – are up 20% so far this year.

Domestic tourism boom

Chinese domestic tourism is growing sharply in keeping with the country's going affluence. In 2012 alone, the per capita disposable income of urban Chinese households rose by 9.6% to Rmb24,565 ($4,009).

Roughly 2.9 billion domestic trips were undertaken in China in 2012 generating a total spend of Rmb2.3 billion ($35.3 million), compared with the 1.7 billion and Rmb874 million, respectively, in 2008, according to data from China’s National Bureau of Statistics (NBS).  

A lot of that increased tourist traffic was captured by theme parks. NBS data shows some 103 million Chinese visitors went to theme parks in 2011 and another 109 million in 2012. These numbers are forecast to hit 115.9 million in 2013, 123.4 million in 2014 and 132 million in 2015.

BNP Paribas and Bank of America Merrill Lynch acted as joint bookrunners and lead managers on the Haichang IPO, while CCB International, China Merchant Securities, Essence International and ICBC had passive bookrunning responsibilities.

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