Jump in hottest Hong Kong IPO makes founder China's second richest

[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 63 per cent as of 10.36am in Hong Kong, on pace to be the city's third-best IPO on record among firms raising more than US$1 billion.

That's pushing the net worth of Zhong Shanshan, who owns 84 per cent of the firm he founded in 1996, to almost US$54 billion, according to the Bloomberg Billionaires Index. He's now the second wealthiest person in China, just after Alibaba Group Holding's Jack Ma and above Tencent Holdings' Pony Ma.

The IPO was a smash hit in Hong Kong, so much so that the retail portion was oversubscribed by more than 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.

The IPO market in China and Hong Kong has remained vibrant this year despite the coronavirus outbreak. Companies raised almost US$60 billion via new share sales in 2020, more than double from the same period in 2019, data compiled by Bloomberg show. Hong Kong is becoming an increasingly popular listing venue amid US-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 by the local media as the Lone Wolf for eschewing business groups and politics, is the only tycoon among China's five richest people who isn't from the tech or real estate industry, which typically dominate the rankings. 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's quite a turnaround for a man whose schooling got interrupted during the nation's Cultural Revolution and who worked in construction and in 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 Mr Zhong and his holding company transferred 0.79 per cent of Nongfu as part of a staff incentive programme.

Jack Ma has topped the list of China's richest people 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 is worth US$25 billion at the US$225 billion valuation the payments giant is targeting.

Mr Ma's wealth stood at US$57.8 billion as of Monday's close, while Tencent's Pony Ma was worth US$52.1 billion.

BLOOMBERG