A Malaysian death care firm and a Chinese social networking website are among the Asian initial public offerings pencilled to come to market this month amid a flurry of pre-Christmas activity.
An unusual pairing at the best of times, Nirvana Funeral Services and Momo Technology separately opened their books on Tuesday.
Nirvana, a Malaysian funeral services provider, is seeking to raise up to $300 million in Hong Kong under the leads of CIMB, UBS and DBS. It set an indicative price range of between HK$3.00 and HK$3.38 per unit late Monday, which means the company is being marketed at 17.8 times to 20.1 times its forecast 2015 earnings.
The base deal comprises primary shares and is scheduled to price on December 9. A 15% greenshoe option, if exercised, will be made up of secondary shares, sources close to the deal said.
Beijing-based insurer Taikang Life Insurance and private equity firm Viewfinder will come in as cornerstone investors. Each have pledged $30 million, sources said.
Nirvana is the first Malaysian funeral services operator to seek a listing in Hong Kong. It comes at a discount to Chinese death care service provider Fu Shou Yuan International Group but is valued in line with Taiwanese cemetery operator Lung Yen Life Service.
Fu Shou Yuan, which operates cemeteries and funeral facilities across the Chinese mainland, is trading at 27.89 times its 2014 earnings. Lung Yen Life Service meanwhile is at 18.71 times 2014 earnings.
Their respective share price performances so far this year contrast sharply: while Fu Shou is down 25%, Lung Yen Life is up 15%.
Nirvana offers integrated death care services in Malaysia, Singapore and Indonesia spread across 10 cemeteries, 12 facilities for storing cremated remains and two funeral homes. It is the largest death care services provider in Malaysia with a 31.1% market share in 2013, according to Frost & Sullivan. It is the only private operator of a commercial columbarium (where urns holding cremated remains are stored) in Singapore and one of the few private cemetery operators in Indonesia.
The death care services market is broken down into two segments: as need (immediate needs arising from death) and pre-need (planning for funeral services).
Availability of land is crucial for these companies. As of June 30, Nirvana held a land bank of 2.2 million square metres. Some 343,421 square metres were for sale as of June, while an additional 1.87 million square metres are for future development, according to the company's prospectus.
Fu Shou Yuan, meanwhile, has a land bank of 1 million square metres.
Nirvana has experienced a rise in gross profits over the past three years. Gross profits totaled $116.8 million in 2011. This compares with $124.2 million in 2012 and $139.7 million in 2013, according to its prospectus.
Momo Technology, the Chinese social networking website, is seeking to follow in the footsteps of Alibaba and JD.com with a US listing that is due to price December 10.
The issuer began taking orders on Monday and aims to sell up to 60 million American Depository Receipts between $12.50 and $14.50 per share in its Nasdaq initial public offering, according to bankers close to the deal. The IPO's total size is between $200 million to $230 million.
Alibaba and 58.com will act as concurrent private placements and have pledged a combined $60 million in the social networking company. The $60 million is on top of the base deal and could boost the total deal to over $270 million, sources familiar with the deal said.
Morgan Stanley, Credit Suisse, JP Morgan and China Renaissance are overseeing the US flotation.
The blended syndicate earnings estimate is between 20 to 23.1 times 2016 earnings, although other research indicates Momo is trading closer to 18.6 to 21.5 times 2016 earnings.
Comparables include Weibo, China's version of Twitter, which has seen its share price climb 6% since it priced its own $285.6 million Nasdaq flotation in April. Tencent, the Chinese internet group, is also labelled a peer by bankers. Its shares have put on 26% year-to-date.
Momo claims to have over 130 million members on its network and over 60 million monthly users. It was founded in 2011 as a location-based social networking application that allows users to chat with people nearby and participate in group events. With 60 million users, this places it second only to WeChat.
Momo is free but makes money via a membership subscription. It also sells digital content. The company reported revenues of $26.2 million for the first nine months of 2014 and net losses of $22.9 million.