WH Group unveils US$5.3b IPO in HK
Print Edition
CHINA’S WH Group Ltd, the world’s biggest pork company, has launched a Hong Kong initial public offering of as much as US$5.3 billion in the second-largest ever IPO by a food and beverage company.
The IPO is coming at a time when Hong Kong’s stock market has been hit by volatility due to concerns about political tensions in Russia, slower growth in China and when the US Federal Reserve may raise borrowing costs.
In view of the market conditions, WH Group and some of its shareholders are offering shares in a relatively wide range of HK$8 to HK$11.25 (US$1.03 to US$1.45) each. A total of 3.65 billion new and existing shares will be offered, putting the deal at up to HK$41.06 billion, according to a term sheet seen by Reuters yesterday.
WH Group, whose products include Smithfield ham, Carando pepperoni and Farmland bacon in the US, has been pre-marketing the IPO since last week. It plans to use some of the proceeds to pay down debt it took as part of its US$4.9 billion takeover of US-based Smithfield Foods Inc last year, people familiar with the plans have said.
The group has “a good anchor book,” though it has signed no cornerstone investors due to volatile global markets, a source familiar with the deal said, declining to be identified because details of the IPO process have not been publicly disclosed.
Typically, a deal the size of WH Group’s would tap cornerstones, which receive a guaranteed allocation for agreeing to retain their stakes for a set period.
“Volatility is part of the reason,” added the source.
Pricing for the IPO is on April 22, with the shares debuting in Hong Kong on April 30.
The WH Group listing would be the world’s second-biggest ever food and beverage IPO after Kraft Food Inc’s US$8.7 billion deal in June 2001. It would also be the largest new listing in the Asia-Pacific since AIA Group Ltd raised US$20.5 billion in October 2010.
WH Group could increase the size of the IPO to US$6.11 billion if underwriters exercise a greenshoe option to meet additional demand.
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