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Zhaogang steels itself for Hong Kong listing
Posted on Thursday, 08 November 2018 13:38
Zhaogang.com is ditching a dual-class share structure now allowed under new Hong Kong listing rules for technology companies in order to have more flexibility on valuation, sources close to the process told Bloomberg. According to the people, the Cayman Islands-incorporated steel industry e-commerce platform still intends to hold an initial public offering, with a view to launching a share sale by the end of this year. However, the Shanghai-headquartered trading website will pursue a regular listing instead of one with weighted voting rights, which allows founders and existing investors to remain in control. Zhaogang will revise the prospectus originally submitted in June that shows joint sponsors for the flotation include Citigroup, China Merchants Securities and Goldman Sachs. The company was established six years ago with USD 1.00 million in backing from angel investors but has quickly expanded to offer products and services in 31 provinces and 292 cities in China and six overseas countries. Its ecosystem connects over 100 steel manufacturers, more than 3,800 third-party suppliers and 94,000+ registered customers, and also hooks up its traders and users with warehousing and logistics services. Furthermore, the group has developed industrial credit assessment and supply chain financing systems that provide accurate and secure channel for large financial institutions to better serve the market. According to the June prospectus, Zhaogang, based on revenue of CNY 17.46 billion (USD 2.52 billion) in the 12 months to 31st December 2017, held 30.6 per cent of China’s CNY 57.00 billion steel e-commerce market in 2017. This sector is expected to increase over the five years to CNY 329.00 billion in 2022, representing a compound annual growth rate of 42.0 per cent. Zhaogang has historically recorded net losses and negative cash flows from operations; against this background the company has completed six financing rounds. The last equity injection was the issue of preference shares worth USD 3,749 million to Fatcat International and Shougang Capital in May 2018. © Zephus Ltd