Nongfu Spring's IPO debut makes a splash on HK market

HONG KONG • It was the hottest initial public offering (IPO) in town. Now, Nongfu Spring's stock surge is turning its founder into China's second-richest person.

Shares of the bottled-water maker jumped as much as 85 per cent and traded up 55 per cent by the midday break in Hong Kong. The debut is on pace to become the city's fourth-best on record among firms that raised more than US$1 billion (S$1.37 billion).

The surge is pushing the net worth of Mr Zhong Shanshan, who owns 84 per cent of the firm he founded in 1996, to over US$51 billion, according to the Bloomberg Billionaires Index. He is now the wealthiest person in China after Alibaba Group co-founder Jack Ma, and the third-richest in Asia.

The IPO was a smash hit in Hong Kong, so much so that the retail portion was oversubscribed by over 1,100 times and Nongfu increased the number of shares allocated to the public. That was after it priced at the top end of a marketed range.

Despite the coronavirus outbreak, the IPO market in China and Hong Kong has remained vibrant this year. Companies raised almost US$60 billion via new share sales this year, more than double in the same period last year, data compiled by Bloomberg shows. Hong Kong is becoming an increasingly popular listing venue amid United States-China tensions, while demand from retail investors has been surging as ample liquidity encouraged banks to lend. In China, IPOs produced at least 24 new billionaires in the first half of the year.

Mr Zhong, also known in local media as the Lone Wolf for eschewing business groups and politics, is the only tycoon among China's five richest people who is not from the tech or real estate industry, which typically dominate the ranking.

His fortune was boosted in April when Beijing Wantai Biological Pharmacy Enterprise, a company he acquired a controlling stake in almost two decades ago, went public in Shanghai. The stock has surged more than 2,100 per cent since then.

That is quite a turnaround for a man whose schooling got interrupted during the nation's Cultural Revolution and who worked in construction and journalism before turning to bottled water.

Now, Mr Zhong is sharing his success: The Nongfu listing is also creating at least 68 new millionaires. Dozens of them became shareholders just last year, when he and his holding company transferred 0.79 per cent of Nongfu as part of a staff incentive programme.

Mr Ma has topped China's richest person list for most of the past six years, after Alibaba went public in the US. The listing of his Ant Group is poised to boost his fortune further - his stake would be worth US$25 billion if it achieves the US$225 billion valuation people familiar with the matter have said it is targeting.

BLOOMBERG