By Jiahui Huang

Shares of Chinese restaurant chain Xiaocaiyuan rose in their trading debut in Hong Kong after drawing modest demand in a US$111 million initial public offering.

The stock was at 8.88 Hong Kong dollars by midday Friday trading, or 4.5% higher than the offering price, outperforming the benchmark Hang Seng Index's 0.1% rise.

Xiaocaiyuan, which operates hundreds of restaurants serving local cuisine, mostly in eastern China, raised gross proceeds of about HK$860.0 million, equivalent to US$110.7 million, at an offering price of HK$8.50 a share. Shares for institutional investors were 1.29 times oversubscribed, according to a Hong Kong exchange filing.

Catering to the mass market, with meals averaging 50 yuan to 100 yuan, or about US$7-US$14, Xiaocaiyuan has grown rapidly since its founding in 2013, with a store count of more than 660 today. It plans to use the IPO proceeds to expand further, including to new markets, as well as boost its supply-chain and information-technology capabilities.

The company grew its revenue by 42% to 4.55 billion yuan in 2023, with net profit more than doubling to 531.1 million yuan, according to its prospectus.

The offering comes as Hong Kong's IPO market has shown signs of recovery after a prolonged period of subdued listings. In the first three quarters of the year, funds raised from new primary and secondary listings in Hong Kong more than doubled from a year ago, well above the 42% and 37% increases in Europe and the Americas, respectively, according to data from consultancy firm EY and markets platform Dealogic.

Nearly all offerings in Hong Kong this year have been oversubscribed.

Chinese appliance maker Midea in September raised almost US$4 billion in the city's largest listing of the year, while delivery giant S.F. Holding raised nearly US$730 million in a listing last month.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

December 19, 2024 23:57 ET (04:57 GMT)

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