China's Home Inns & Hotels Management Inc, a budget hotel chain, has attracted more than $1 billion in orders for its $95 million Nasdaq listing, sources familiar with the deal said on Monday.
Home Inns and a group of early investors are offering 7.9 million American Depository Shares (ADS) for $10 to $12 each in a Nasdaq IPO set to price on Wednesday, and one source said the deal may price above range due to the strong demand.
Hotels are big business in Asia - annual revenue is $115 billion and growing 10 percent a year - and China's market is booming as budget chains become more prevalent and Beijing gears up to host visitors to the 2008 Summer Olympics.
The founders of Ctrip.com, China's biggest online travel agent, were early investors in Home Inns, which focuses on Chinese travellers spending 150-300 yuan ($18-$35) per night.
Home Inns' deal, handled by underwriters Credit Suisse and Merrill Lynch, has an over-allotment option to sell an additional 1.185 million ADSs. Investment funds AsiaStar IT Fund, IDG Technology Venture Investments and Kangaroo Investments are selling 3.0 million ADSs and have an over-allotment option of nearly 200,000 ADSs.
As of June 30, Home Inns ran 82 hotels in 26 cities including Shanghai, Beijing and Tianjin.
The company's net income was 20.9 million yuan ($2.6 million) last year, up from 1.5 million yuan in 2003. In the first half of this year, it earned 27.2 million yuan. Several hotel chains in the region are tapping the capital markets to raise funds for growth.
Jinjiang International, China's largest hotel group, plans to raise up to $300 million in a Hong Kong listing by the end of the year in a deal being handled by BNP Paribas and UBS. Regal Hotels will raise $500 million next month with a real estate investment trust (REIT) listing, while Hong Kong's Cheung Kong (Holdings) and Far East Consortium International Ltd are considering hotel spin-offs. Shanghai-based Home Inns will trade on the Nasdaq under the symbol "HMIN".