Glaucus Research – Ozner Water International Holding Limited

Posted by Lin Liye, Year 4 undergrad at the School of Economics, Singapore Management University

Ozner Water Becomes an Oddity in Hong Kong IPO Market

For the first time since a state-owned auction house raised US$380 million in its February initial public offering, a Hong Kong listing candidate has managed to price its deal at the top end of an indicative range.

Ozner Water International Holding, a Chinese provider of water purifiers, raised US$147 million after pricing its shares at 2.7 Hong Kong dollars (US$0.35) each, according to a person familiar with the matter Wednesday. The price range of the IPO by the company, partly owned by private equity firm SAIF Partners and Goldman Sachs Group Inc.GS -0.41%, was HK$2.25-HK$2.70.

The last Hong Kong IPO that priced at the top end of its price range was the US$380 million IPO by Poly Culture Group 3636.HK +3.50% in February, according to Dealogic.

Helping Ozner Water sell its deal, say analysts, was fair pricing, a rising stock market–the Hang Seng Index is up 6.4% in the past month–and influential cornerstone investors.

To increase the likelihood of the IPO’s success, Ozner Water locked in a US$40 million cornerstone investment from New York-based Och-Ziff Capital Management Group LLC before the formal bookbuilding process.

In Hong Kong, bankers can sell some of the shares in an offering to cornerstone investors–who commit to buying and holding their stake for a specified period after the company has listed–to boost other investors’ confidence in the deal.

Ozner Water’s IPO was priced at 17.4 times of 2014 forecast earnings, said the person. That is lower than peers such as Korea’s Coway Co., which is trading in Seoul at 21.6 times earnings.

Goldman Sachs Group Inc. and Standard Chartered Securities handled the IPO of Ozner Water.


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