Shuanghui plans HK IPO after Smithfield deal - report
China’s Shuanghui International - which is backed by CDH Investments and Goldman Sachs - intends to list US pork producer Smithfield Foods on the Hong Kong stock exchange following its planned takeover.
A Hong Kong IPO will value the merged entity at around $4 billion, Reuters reported. It would allow the company to trade in a market that would place a higher valuation on the stock than the US and other exchanges. It would also offer an exit opportunity for its PE investors. Proceeds could be used to pay down some of the debt.
The move will follow the completion of Shuanghui's proposed $4.7 billion acquisition of Smithfield, which was announced at the end of May. The proposed deal valued Smithfield at $7.1 billion including debt. Bank of China and Morgan Stanley was said to provide $7 billion in financing for the deal.
The deal is expected to close in the second half of 2013, pending approval by numerous parties, including the US Committee on Foreign Investment in the US (CFIUS).
Early this month, the head of the Senate Agricultural Committee held a hearing on foreign ownership of US food manufacturers in response to the proposed takeover where 11 U.S. senators expressed concerns over the potential negative impacts of the proposed acquisition of Smithfield Foods
Every legal expert AVCJ spoke to agreed there are limited grounds on which the committee could exercise this veto. But they appreciate that political sentiment is a far more fickle creature and wait to see how the transaction stands up in the face of stringent opposition, if indeed any emerges at all.
CDH and Goldman first invested in Shuanghui in 2006, committing $250 million to the parent group, which gave them an approximately 35% indirect interest in Henan Shuanghui. The following year Temasek Holdings and New Horizon came in. Goldman was said to have divested part of its interest to CDH in 2009.
According to Shuanghui's 2012 annual report, CDH Investments owns 33.7% of Shuanghui International, while Goldman Sachs, New Horizon and Temasek have 5.18%, 4.15% and 2.76%, respectively. Entities controlled by Shuanghui International own 73.16% of Shenzhen-listed Henan Shuanghui.
More on Greater China
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.