China-based diaper maker AAB Group files application for $300M Hong Kong IPO- sources

January 17
7:40 AM 2014

Sources told Bloomberg that AAB Group Co is looking to raise up to $300 million its Hong Kong initial public offering. AAB Group Co is a China-based manufacturer of sanitary products like diapers and sanitary napkins. It is based in Quanzhou, a city located in the province of Fujian in eastern China.

The company has lodged its application to the Hong Kong Stock Exchange, according to the people who have knowledge of the matter but spoke on the condition of anonymity because the information is confidential. AAB Group intends to sell its shares in June, the report said.  

AAB Group is looking to raise funds as foreign rivals like Japan-based Unicharm Corp and Texas-based Kimberly Clark Corp extend its reach in China. Citing estimates from Goldman Sachs Group Inc, the report said China's child-related consumption will increase 22% each year in the next five years as the government relaxed its rules that limit families to having only one child.

The sources added that the companies working on the planned share sale include Bank of America Corp, RaffAello Capital Ltd and UBS AG.

Last month, the legislature of China gave its approval on a bill that would allow more couples to bear a second child. This came after President Xi Jinping suggested easing the government's controls on population so that the country would be able to reverse a declining workforce, the report said. The new rules state that couples can have a second child if either of them is an only child.

Another Chinese diaper manufacturer, Hengan International Group Co, also has plans to ramp up its production capacity and launch premium goods. In a January 15 interview, Hengan International Chief Executive Officer Hui Lin Chit told Bloomberg they will be increasing their capacity to make diapers by 20% and begin to sell more expensive products in the second half of this year.

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