CDH raises $1.2b via sell down of China-based WH Group

WH said in a filing that CDH would sell an aggregate 1.55 billion shares at HK$5.95 apiece, which represents a 5% discount to the last trading price. The transaction includes multiple tranches: 880 million shares will be placed to institutional investors; 292 million shares will go to an investment vehicle held by WH's chairman, Wan Long, and company management; and 383 million shares will be sold to other unnamed investors.

Upon completion of the deal, CDH's shareholding in the company will be reduced to 19.77% from 30.39%.

The GP first invested in WH, formerly known as Shuanghui International Holdings, in 2006. It has backed the company across four funds, supporting WH's acquisition of US-based Smithfield Foods and then taking it public in Hong Kong via a $2 billion offering in August 2013. None of the existing investors - including Goldman Sachs, New Horizon Capital and Temasek Holdings - sold shares in the offering.

Keen to return capital to investors in its early funds, CDH attempted to circumvent the one-year lock-up by pledging shares in WH in return for a $500 million loan in October 2014. However, WH's share price dropped by around 25% in the following quarter, triggering margin calls that required CDH to increase the size of the pledge. The private equity firm decided to cut its losses - interest payments and fees - and repay the loan, which meant asking LPs to give back the distributed money.

WH's turnover reached $21.21 billion last year, down 4.6% from 2014, while net profit came to $995 million, up from $972 million in 2014.

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• Topics
• Greater China
• Open market
• Buyback
• Consumer
• China
• CDH Investments Management
• Exit