HONG KONG — Crystal International Group Ltd., plans to raise up to $4.5 billion Hong Kong dollars, or $576.6 million at current exchange, in an initial public offering beginning Monday that has attracted key investors such as Fast Retailing and L Brands.
The world’s largest apparel maker by production volume in 2016, according to Euromonitor, Crystal is offering between 7.30 HKD and 8.80 HKD a share, with 509.3 million shares to be issued in total, according to its filing to the Hong Kong Stock Exchange.
Uniqlo-owner Fast Retailing has agreed to subscribe for shares worth the equivalent of 20 million HKD, while L (Overseas) Holdings, a subsidiary of L Brands, will subscribe for 10 million HKD worth of shares. Crystal Group produces for many globally recognized brands including Fast Retailing, H&M, Marks & Spencer, L Brands, Abercrombie & Fitch and Gap.
Once underwriting fees, commissions and expenses are accounted for, the net funds raised should come to 3.89 billion HKD assuming a share price of 8.05 HKD.
Around 45 percent of the funds raised will be used to expand the group’s manufacturing capacity — 25 percent from that to expand its Vietnam facilities and 20 percent in Bangladesh over the next two to three years. Around 20 percent will be used for upstream vertical expansion into fabric production, including 8 percent for building fabric mills in Bangladesh to manufacture lifestyle, sportswear, and outdoor apparel. A quarter will go to loans repayment and 10 percent will go to the group’s working capital and other general corporate expenses.
Crystal’s net profit in the first six months of the year was 69.2 million HKD, up 31 percent from the same period a year ago. In 2016, its full year net profit was 123.7 million HKD. Sales from its five largest customers accounted for close to 70 percent of revenue last year.
The firm was founded in 1970 by its chairman Kenneth Lo, who comes from a wealthy textiles family. His father is the late billionaire Law Ting Pong, who founded the mass apparel retailer Bossini International Holdings Ltd., which is also publicly listed.
Crystal’s shares are expected to begin trading on Nov. 3 on the Hong Kong Stock Exchange’s main board. Morgan Stanley and HSBC are joint sponsors for the offering.