Official bookbuilding is due to start today for the IPO of Naibu, the Chinese sportswear manufacturer. According to Peter Shea, chairman and CEO of Daniel Stewart & Co, the bookrunner on the deal in London, up to 70 institutions were visited in marketing the deal and only one or two are said to have declined. The deal could raise up to £50 million ($79 million) and kick-start a fresh round of Chinese listings on London’s second market.
There are up to 20 Chinese companies already listed on AIM, but this is a small proportion of the total of 1,400 listed companies. Even so, there is a huge backlog of deals that are clogging up the IPO pipeline in Hong Kong and on the mainland, and that could drive those companies to look at alternative listing venues such as London.
For those companies that need capital fast, but are too small to jump to the front of Asian IPO pipelines, a London listing might make sense. “The company came to London due to the speed of getting the deal done,” says Shea. “But also they saw the need to internationalise [their investor base]. AIM has 1,400 companies, good capitalisation and lots of international investor interest.”
The company will use the proceeds to build two new factories, in-sourcing the manufacture of its products, especially its foot and outerwear ranges. It previously outsourced this production process to a third party.
In a related moved, Daniel Stewart & Co has applied to the SFC in Hong Kong for a licence to open a new office in the city. It is transferring Adam Wilson from the existing Dubai office and will move two further staff from the Kuala Lumpur office. It has also signed agreements with Cash Securities and TA Securities to help each party enter the UK and Hong Kong market respectively. The agreements will be along a similar model to one Daniel Stewart & Co has with Clarkson in the Middle East, centred around the joint branding of local research to London AIM and main board investors, and UK research to local investors.
