Haidilao, the “hot pot industry leader” that has always been rumored to be listed, is finally going to go public on the Hong Kong Stock Exchange.

Haidilao Hot Pot was founded in 1994, and there are four main bosses and two couples behind it. According to the enterprise survey, they each held 25.5% of the shares: Zhang Yong, 8%, Shu Ping (Zhang Yong's wife), 8%, and Li Haiyan (wife of Shi Yonghong), 8%. However, 24 years ago, all four of them had shares, each holding 25% of the shares.

The history of changes in Haidilao's shareholding structure can also be described as Zhang Yong's “centralization history.” Among these, “Buddhist” partner Shi Yonghong and his wife also contributed greatly.

According to Bloomberg quoting people familiar with the matter, Haidilao is seeking approval for an IPO of up to 1 billion US dollars next week, and the Hong Kong Stock Exchange hearing is scheduled to be held on August 23. According to the news, Haidilao will begin a roadshow in a week and is initially scheduled to go to Hong Kong for an IPO on September 10.

A relevant person from Haidilao told “Financial World” weekly: “Haidilao is indeed preparing to go public, but it won't be as soon as September 10.” Meanwhile, Ye Fengtao, co-founder of Spoons Classroom, revealed to “Financial World” weekly: “Haidilao is very popular in the capital market, and even Haidilao's co-underwriters are no longer able to get the cornerstone investment and the previous round of strategic investment quotas.”

Also, according to the “I Know About the IPO” report, Haidilao's listing pricing range is US$9 billion to US$12 billion, which is equivalent to 22 to 28 times the price-earnings ratio based on the estimated net profit for 2019. According to the above news, the lead underwriters of Haidilao's current IPO are Goldman Sachs and CMB International, and the competition for cornerstone investors has entered the final stage.

According to information, Haidilao International Holdings submitted a prospectus on the Hong Kong Stock Exchange on May 17 this year.

According to the prospectus, Haidilao's total revenue in 2017 was 10.637 billion yuan, an increase of 36.2% over the previous year. The compound annual growth rate for the past three years was 35.9%. Profit also increased from 412 million yuan in 2015 to 1,194 million yuan in 2017, with a compound annual growth rate of 70.5%.

Haidilao Hot Pot was founded in 1994, and there are four main bosses and two couples behind it. According to the enterprise survey, they each held 25.5% of the shares: Zhang Yong, 8%, Shu Ping (Zhang Yong's wife), 8%, and Li Haiyan (wife of Shi Yonghong), 8%. However, 24 years ago, all four of them had shares, each holding 25% of the shares.

The history of changes in Haidilao's shareholding structure can also be described as Zhang Yong's “centralization history.” Among these, “Buddhist” partner Shi Yonghong and his wife also contributed greatly.

Zhang Yong seizes shares with an iron fist

Zhang Yong became involved with hot pot in 1994. Previously, in his early 20s, he was also a serial entrepreneur, selling gold watches and gasoline respectively.

However, the previous two businesses were unfavorable. As a result, Zhang Yong often wandered the streets of Chengdu looking for opportunities. He discovered that the small hot pot was loved by the locals. Zhang Yong returned to Jianyang City, smelling business opportunities. In a street store of more than 10 square meters, he started his third business attempt and invited his good friend Shi Yonghong at the time and his girlfriend Li Haiyan to help.

The name of the hot pot restaurant is “Little Chili Pepper.” After opening, the business was as lively as its name. Fortunately, Little Chili Pepper also brought Zhang Yong his first love. Shu Ping is an employee at the store opposite Little Chili Pepper. She loves hot pot. Naturally, she is a regular customer. It didn't take long for the two to fall in love. That year, Zhang Yong was 23 years old.

Zhang Yong, who was bathed in love, quickly spent all his money. Financially struggling, he made up his mind to revive the hot pot restaurant. “Take all the money. Let's open a regular hot pot restaurant this time.” Zhang Yong said. Shu Ping, Shi Yonghong, and Li Haiyan jointly raised 8,000 yuan, 25% of each share. Zhang Yong, who has an empty pocket, did not pay any money and also received shares of equal value.

“Haidilao” is taken from the Sichuan mahjong term. One day, Zhang Yong's wife was playing mahjong, and Zhang Yong was worried about what name the hot pot restaurant would take. At this point, Shu Ping's card happened to be “Haidilao” (the last card played with a lie). Zhang Yong's inspiration came from a sudden; he called it “Haidilao.”

At the beginning of its establishment, Haidilao followed the management model of a family business: shareholders were both bosses and employees, and the management structure was simple. “Customers come, everyone works with consciousness. When the guests leave, they drink water, chat, and play mahjong.” At the same time, Haidilao made money, and the four bosses earned it in four installments; the money lost was also compensated in proportion.

Family businesses are highly loyal, but they are scattered easily, and Haidilao has not escaped this strange circle. Zhang Yong felt that “this kind of team can't go long.”

Slowly, Zhang Yong came up with the idea of becoming a hot pot restaurant owner. The magazine once told the story of Zhang Yong becoming the manager: After the guests left one afternoon, Shu Ping and Li Haiyan set up another mahjong table with the same two girls. At this point, Zhang Yong proposed to have a meeting. The women were fighting hard; they didn't take advantage of Zhang Yong. Zhang Yong, who didn't like to play mahjong in the first place, suddenly flipped the table. After the outsiders left, Zhang Yong turned over the overturned table and stepped on his feet to start a mahjong meeting scattered all over the place. Zhang Yong said, “A fully functioning company must have a manager. I decided to be the manager.” Zhang Yong meant that a restaurant must have one person at the helm, who is responsible for the overall management of the hot pot restaurant's operation, and others coordinate the division of labor, so that operational efficiency can be improved. Shi Yonghong and others all agreed.

As far as Haidilao is concerned, this incident was a “Zunyi meeting.” Since then, Zhang Yong has had an absolute say in Haidilao.

In 2004, Zhang Yong proposed that his wife Shu Ping and Shi Yonghong's wife Li Haiyan leave the company and only become shareholders. Zhang Yong then asked Shi Yonghong to leave Haidilao in 2007 and purchased 18% of the shares from Shi Yonghong and his wife at the original investment price. In 2007, Zhang Yong and his wife became 68% absolute shareholders of Haidilao.

That passive share transfer back then also left Shi Yonghong “in his throat”. Some media have asked how Shi Yonghong agreed to Zhang Yong's “robber-like extravagance”? Shi Yonghong answered, “If you don't agree what you can do, it's always up to him.”

He commented that Zhang Yong's treatment of Shi Yonghong made it easy to think of ungrinding and killing a donkey. However, as the founder of the company, Zhang Yong's decision was undoubtedly correct from later on, because if Haidilao wanted to become a modern enterprise, it was necessary to solve the family business ceiling problem.

Haidilao stepped out of his childhood in Jianyang, became famous and became an “influencer” in today's hot pot industry. According to the prospectus, at the beginning of 2015, the number of Haidilao restaurants was still only 112, reaching 273 at the end of 2017, and has increased to 320 since 2018, serving more than 100 million customers per year.

It is worth mentioning that in addition to Zhang Yong, who is the chairman of the company's board of directors and executive director, it is worth mentioning. In recent years, the other three founders have all returned to Haidilao. Shu Ping and Shi Yonghong serve as the company's executive directors, and Li Haiyan as supervisors.

The partner changed hands to support Maocai

Currently, Haidilao's commercial landscape includes Hong Kong stock listed companies such as Yi-Hai International, New Sanban Maocai Company Youdingyou, Supply Chain Shuhai Weihai Restaurant Management and Training Company, Shu Yun Oriental Decoration Company, etc., and Zhang Yong is an indirect funder of Yunfeng Equity Investment Center, Haiyue Investment, and Haijing Lin Xiyu Investment Center. Affiliates of these companies include companies such as Tencent Commerce, Giant Network, HKUST Inflian, Handu Yishe, etc., and Haidilao is also listed as a shareholder in Hebang Stock's prospectus.

Among these, I have to mention the listing of Yihai International.

On July 13, 2016, as Haidilao's exclusive substrate supplier and holding subsidiary, Yihai International operated and listed independently on the Hong Kong Stock Exchange. According to information, Yihai International was spun off from Haidilao Group; at the same time, more than half of Yihai International's revenue comes from Haidilao.

After the Yihai Sea Market, Zhang Yong and Shu Ping owned 47.76% of Yihai's shares and were the largest shareholders. Since more than half of Yihai's revenue comes from Haidilao, it is clear that when the condiment company Yihai was split and listed internationally, Haidilao is following a “curved online market” path.

After that, Maocai companies that were popular all over the river were listed on the new third board, further solidified the “Haidilao Restaurant Empire.”

In April 2017, “U Ding Maocai” was listed on the third board. According to the “Transfer Instructions” of Youdingyou, the operator of “U Ding Maocai”, the company's revenue in the first 8 months of 2016 exceeded 60 million yuan, net profit of 318,600 yuan, and the pre-listing financing valuation reached 218 million yuan.

It is worth mentioning that although they dropped out of Haidilao after their shares were reduced, Shi Yonghong and Li Haiyan also played an important role as “firefighting captains of Haidilao companies” in “U Ding Maocai.”

In 2012, senior figures of Haidilao, Yang Lijuan, chief operating officer of Haidilao, Yuan Huaqiang, former director of Haidilao, and Gou Yiqun, former chairman of Yihai International, jointly funded the establishment of Youdingyou. Their restaurant brand is called “U Ding Maocai”. However, this restaurant company with Haidilao genes had serious losses in the early stages of its establishment: in 2014 and 2015, the company lost 3.05 million yuan and 3.58 million yuan in net profit for two consecutive years.

However, Haidilao's co-founders Shi Yonghong and Li Haiyan became “white knights” when the Maocai company lost money. The two became actual controllers of Youdingyou through capital increases (total shareholding 63.82%). With the capital increase, the Maocai brand chain finally survived the crisis: in the first eight months of 2016, it barely reversed its losses. With revenue of 65.58 million yuan, it earned a small profit of 310,000 yuan.

Although I don't know why Shi Yonghong and his wife got involved in Youdingyou. However, after the capital increase, Youdingyou made Zhang Yong's family the biggest beneficiaries of the whole incident.

According to Zebra Consumer reports, at the end of 2014, Li Haiyan transferred 1% of Youdingyou Co., Ltd. to Zhang Yong's brother Zhang Shuoyi at a price of 44,000 yuan (Zhang Shuoyi, born in 1973, is Zhang Yong's brother and held positions such as manager of the Shanghai area of Haidilao in his early years.) ; In July 2015, Zhang Shuoyi became the company's executive director and general manager; in 2016, Li Haiyan increased his capital by 160,400 yuan on behalf of Zhang Shuoyi, and the chairman of the company became Zhang Shuoyi.

According to the media mentioned above, after the transfer of power was completed, Shi Yonghong and Li Haiyan chose to leave. Before leaving, Shi Yonghong collaborated with his wife Li Haiyan, Yang Lijuan, Gou Yiqun, and Yuan Huaqiang to transfer all of the company's shares to Beijing Jinghai Youding at the price of every 1 yuan invested. The parent company of Jinghai Youding was Jingyuan Investment. Shi Yonghong and Li Haiyan held 32% of the company's shares, and Zhang Yong and Shu Ping held 68% of the company's shares.

Today, Zhang Yong's “capital empire” has formed a complete upstream and downstream industrial chain. Haidilao has established a series of industrial chain-related companies, and the prototype of the empire has basically taken shape.

As Haidilao goes public in Hong Kong, Zhang Yong's personal wealth will also grow rapidly. Currently, Zhang Yong and Shu Ping hold 62.7% of Haidilao's shares. According to the 2017 Hurun 100 Wealth List, Zhang Yong and Shu Ping ranked 825th with a fortune of 5 billion yuan.