IPO of Dynasty savoured
(China Daily HK Edition)
Updated: 2005-01-23 09:44

Dynasty Fine Wines Group, capitalizing on the mainland's growing taste for wine, raised US$86.5 million in a well-received initial public offering, a source familiar with the deal said yesterday.

Dynasty, a joint venture between France's Remy Cointreau and mainland conglomerate Tianjin Development Holdings, priced 300 million shares at HK$2.25 (28.9 US cents) each, the source said, at the top end of a range of HK$1.75 to HK$2.25.

The institutional portion of the offering was 80 times covered, while the retail subscription was 625 times overbooked, the source said.

China's growing wealth and emerging middle class have made red and white wines more popular. Its retail wine market has jumped 78 per cent from 1997 to 3.4 billion yuan (US$410 million) in 2003, according to Access Asia.

Dynasty is the second largest Chinese winemaker by turnover behind Changyu Group in a market where sales are expected to increase 35 per cent between 2003 and 2008, according to the World Wine Industry Association, compared to global projections of 5.4 per cent.

Founded in 1980 as a Sino-French venture, Dynasty makes red, white and sparkling wine as well as brandy, with red wine accounting for about 94 per cent of its 620.9 million yuan (US$75 million) turnover for the nine months ended September 30.

Its principal product is Dynasty Dry Red Wine, which sells for about 37 yuan (US$4.50) a bottle in Beijing and Shanghai supermarkets.

By contrast, a bottle of Heineken beer costs about 3 to 4 yuan in Shanghai while an average bottle of French wine can range from 69 to 88 yuan.

Dynasty buys its grapes from suppliers in Shandong, Hebei and Tianjin, and is seeking to expand its Chinese and European distribution channels with funds from the IPO. Currently, less than 1 per cent of sales comes from outside China.

On January 16, Dynasty said 10 per cent of the new shares would be for public subscription with the remaining 270 million shares going to institutional investors.

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