Shuanghui hires banks for US$6b IPO in HK
Print Edition
China’s Shuanghui International Holdings, which bought US pork producer Smithfield Foods Inc this year, has hired banks for a Hong Kong initial public offering, seeking to raise up to US$6 billion in what could be the region’s largest stock offering in four years.
An IPO would allow Shuanghui to pay down debt borrowed for the US$4.7 billion Smithfield purchase and provide an exit for investors such as CDH, one of China’s biggest and oldest private equity firms that has long aimed to sell its stake in the company.
The potential deal size is subject to change. While one source familiar the matter said it could go as high as US$6 billion, another said it was more likely to be in the US$3-4 billion range.
“The IPO will give a platform for existing shareholders to cash out of their investments, but it will have limited impact on the operations of the company,” said Anson Chan, an analyst at KGI Securities.
“But the IPO will be a milestone in Shuanghui’s journey from a local company to an international food company, which underscores the maturing of China’s food industry,” he said. Chan currently does not rate the company.
The listing, expected in the second quarter of 2014, would follow an up to US$5 billion IPO for the Hong Kong electricity business of tycoon Li Ka-shing’s Power Assets Holdings Ltd.
Both deals would be a major boost for the Hong Kong stock exchange, which has seen public offering volumes drop over the last two years.
Shuanghui has tapped BOC International, Citic Securities International, Goldman Sachs, Morgan Stanley, Standard Chartered and UBS to lead the IPO, sources familiar with the matter said.
The bank line-up is not final, one person familiar with the plan said.
A representative for Shuanghui said in an e-mail that the company would not comment on any enquiries related to a possible IPO.
Plans for an IPO by Shuanghui were first revealed in July when sources said the combined Shuanghui-Smithfield company would have a value of about US$20 billion.
The Smithfield purchase was the largest-ever acquisition of a US company by a Chinese company, bringing together the world’s biggest hog producer and China’s largest meat processing company — Shuanghui-owned Henan Shuanghui Investment and Development Co.
Including debt, the transaction was valued at US$7.1 billion. The Bank of China and Morgan Stanley together provided US$7 billion of loans to finance the deal.
Despite political opposition in the US, the deal closed in September, allowing Shuanghui to directly sell Smithfield pork goods across China to meet the country’s huge demand for the product.
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