PE-backed WH Group targets $5.3b in HK IPO
WH Group, the PE-backed Chinese meat processing company that acquired US pork producer Smithfield Foods, is planning to raise as much as HK$41 billion ($5.3 billion) through a Hong Kong IPO.
The float - which could give the company a valuation of up to $21 billion - is set to be the world's second biggest IPO ever by a food and beverage firm after Kraft Food's $8.7 billion offering in 2001.
The Chinese pork producer - formerly known as Shuanghui International Holdings - is selling 3.66 billion shares, of which 20% are held by existing shareholders. The indicative price range is HK$8-11.25 per share.
There is an option to sell 20% more shares, increasing the deal size to as much as $6.4 billion, if demand is strong. It is unclear which shareholders are selling shares.
CDH Investments is the single largest shareholder in WH Group with a 38.1% stake, while the firm's management holds 42.6%. CDH first invested $250 million in Shuanghui alongside Goldman Sachs in 2006.
Other shareholders include Singapore state investment firm Temasek Holdings and New Horizon Capital, both of whom invested in the company in 2009.
WH Group bought Smithfield in September last year for $4.7 billiion. It was the largest ever buyout by a Chinese company in the United States. It is understood that the capital raised from the offering will be used to pay down debt used to finance the Smithfield acquisition.
Shanghui borrowed around $4 billion to buy Smithfield and took on $3 billion of the US firm's debt.
According to The Wall Street Journal, WH Group has secured Singapore sovereign-wealth fund GIC Private and Norwegian central bank Norges Bank as anchor investors. The comapny is scheduled to list on April 30.
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