WH Group delays IPO in HK as demand weakens
Print Edition
CHINESE pork-producing giant WH Group yesterday said it’s shelving its multibillion-dollar Hong Kong initial public offering as investor demand sags amid rocky financial markets.
The company said it is abandoning the plan to sell shares because of “deteriorating market conditions and recent excessive market volatility.” It said the global stock offering “will not proceed at this time.”
WH Group became the world’s biggest pork company after buying Smithfield Foods of the US last year and the decision to abandon the share sale complicates its efforts to pay off loans used to complete that purchase.
The Chinese company, which changed its name from Shuanghui International, had initially planned to raise up to US$5.3 billion IPO in Hong Kong.
Most of the proceeds were intended to be used to pay off the debt from the Smithfield takeover, which was valued at US$7.1 billion, including US$4.7 billion in cash. But news reports indicated that investors were lukewarm on the offering, forcing bankers to cut the size of the deal before scrapping it altogether.
The company last week slashed the offer size by two-thirds. This was a result, fund managers and bankers said, of WH Group and its owners seeking too high a price, hiring too many underwriters as well as negative publicity over sky-high executive compensation.
Also, sentiment toward new listings slid worldwide.
WH Group hired a record number of 29 underwriters for the deal, surpassing the previous all-time high of 21 mandated for China Galaxy Securities Ltd’s US$1.1 billion IPO last year.
BOC International, Citic Securities International, DBS, Goldman Sachs, Morgan Stanley, Standard Chartered and UBS were hired as sponsors of the share offer. Bank of America Merrill Lynch, Barclays, China International Capital Corp, Credit Suisse, Deutsche Bank, ICBC International, JPMorgan and Rabobank also acted as joint global coordinators, with another 13 banks hired as bookrunners.
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