CDH to realize $1.6b from WH Group through share pledge

According to a regulatory filing, CDH agreed to mortgage 2.07 billion WH Group shares, or a 14.13% stake, with an unnamed security agent on October 14, in exchange for loans. The estimated proceeds are based on WH Group's closing price of HK$6.09 on that day.

The private equity firm is still bound by a 12-month lock-up dating from WH Group's Hong Kong IPO in August, but the pledge should allow capital to be returned to investors. WH Group raised HK$15.3 billion when it went public, the third-largest IPO in Asia this year.

None of the existing investors sold shares in the offering. CDH held a 38.1% interest in WH Group, having first invested $250 million in the company alongside Goldman Sachs in 2006. Goldman held 5.18%, while New Horizon Capital owned 4.15%, Temasek Holdings had 2.76% and Kerry Holdings 7.4%.

WH Group's listing was originally planned for May, with the PE backers set for partial exits in an offering expected to raise up $5.3 billion. However, following a lukewarm response from investors - there were said to be concerns about the valuation and executive compensation - the offering was first slashed in size and then abandoned completely.

The relaunched IPO was more modest in size and valuation, with fewer investment banks running the process.

WH Group - which changed its name from Shuanghui International Holdings after it acquired US-based Smithfield Foods for $4.7 billion in 2013 - claims to have the number one market shares across China, the US and several key markets in Europe.

With both the Shuanghui and Smithfield operations, the group owns Asia's largest animal protein company and US's largest pork firm, respectively. It also has a 37% stake in Campofrio, one of the largest European packaged meat companies.

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• Topics
• Greater China
• Exits
• China
• Consumer
• Exit
• CDH Investments Management
• Agriculture
• Hong Kong (China)