Zhong Shanshan, the founder of China’s largest bottled water company Nongfu Spring, has become the country’s third richest person after the company’s Initial Public Offering (IPO) on the Hong Kong Stock Exchange on Tuesday.
Nongfu Spring’s stock soared 85% after the company’s US$1.1 billion IPO attracted a record level of retail orders.
Nongfu Spring’s IPO price started at US$2.77 and surged to US$5.14, with as much as US$387 million changing hands on Nongfu Spring’s first day of trading. At the end of trading, Nongfu Spring closed 54% higher and its market value was estimated at nearly US$48 billion, which is more valuable than Danone SA, the French food company behind Evian, Volvic water and Danone yogurt.
Zhong, who owns 84% of Nongfu Spring, has a fortune of around US$51 billion. At one point on Tuesday, his fortune surpassed the US$51.3 billion net worth of China’s second-richest man Pony Ma, the founder of Chinese internet group Tencent. Jack Ma, the founder of ecommerce business Alibaba, remains China’s wealthiest individual with an estimated US$57.8 billion net worth.
Zhong, 65, is sharing some of his success. The prospectus listed 68 shareholders in addition to Zhong, with stakes ranging from 0.0063% to 1.4%. Some shareholders became owners last year, when Zhong and his holding company transferred 0.79% of Nongfu Spring to 33 people as part of a staff incentive program.
Zhong’s extended family have become rich as a result. Lu Xiaowei, an elder sister of his wife, has a 1.4% stake valued at US$432 million, while two of her siblings have holdings worth US$428 million each. Zhong’s sisters, Zhong Xiaoxiao and Zhong Xuanxuan, own US$428 million and US$214 million in Nongfu shares respectively, reported The Print.
Zhong began 2020 with a fortune approaching US$7 billion. In April, Beijing Wantai Biological Pharmacy Enterprise Co, a company he bought a controlling stake in almost two decades ago, went public in Shanghai and his wealth catapulted to US$20 billion in early August as the stock surged by almost 3,200%. It’s since pared gains, though it’s still up 24-fold since its listing.
Nongfu Spring, known widely by their red top plastic bottles, has tapped into a growing demand in China for bottled water as mistrust over water safety has intensified, together with Chinese consumers’ increasing purchasing power. Based in the eastern province of Zhejiang, Nongfu Spring was founded in 1996 by Zhong with the slogan ‘Nongfu Spring tastes a bit sweet’.
Nongfu Spring’s IPO prospectus showed that retail sales in China’s bottled water market rose to US$29.5 billion in 2019, with Nongfu Spring enjoying a 20% market share, the largest of any company. The market is expected to grow at an average annual rate of more than 10% between now and 2024, according to research firm Frost & Sullivan.