Shenzhen Capital-backed Jindan Seeks To Raise $91m In ChiNext IPO

Henan Jindan Lactic Acid Technology Co.,Ltd, manufacturer of lactic acid products, is looking to raise 638 million yuan ($91 million) on the ChiNext board of the Shenzhen Stock Exchange.

Jindan is backed by Shenzhen Municipal Government-owned financial service institution Shenzhen Capital Group Company (SCGC).

Jindan’s IPO application was approved by China Securities Regulatory Commission on March 13.

The company plans to sell up to 28.30 million common shares at a price of 22.53 yuan ($3.2), according to filing.

Tsinghua Holdings-backed Sinolink Securities is acting as the lead underwriter of the deal.

Founded in 2006 and headquartered in Zhengzhou, Jindan produces 100, 000 tons of lactic acid and lactate every year. Its products are widely used in various kind of foods and medicines, among others, and are exported to over 80 countries.

Jindan also has a subsidiary in the Netherlands.

Its prospectus revealed that it generated 878 million ($125 million) in annual revenue and 113 million yuan ($16 million) in net profit as of 2019. Meanwhile, it had 1.2 billion yuan ($172 million) in assets under management.

With the IPO, Zhang Peng will remain its controlling shareholder in Jindan, holding 32.69 per cent of equity. Guangzhou-based investment management firm CXVC will be the second-largest shareholder owning 6.60 per cent of stake.

SCGC will have 1.80 per cent of stake in Jindan, down 0.6 per cent.

Jindan will deploy the IPO proceeds to ramp up the lactic acid manufacturing capacity and develop a biodegradation project, besides replenishing its working capital.

Previously, Jindan has completed three rounds of financing. It raised an undisclosed round of funding from First Capital Fund in 2015. Back in 2010, it secured its Series A and pre-Series A rounds of funding from state-owned venture capital firm China Venture Capital, SCGC and CXVC.