WH Group, Investors Seek $5.3 Billion From Hong Kong Offer

WH Group Ltd., the world’s biggest pork supplier, and its owners are seeking as much as $5.3 billion in Hong Kong’s largest initial public offering in more than three years.

The company and investors including Temasek Holdings Pte and Goldman Sachs Group Inc. are offering about 3.65 billion shares at HK$8 to HK$11.25 each, according to terms for the deal obtained by Bloomberg News. New shares make up 80 percent of the base offering, the terms show.

The Chinese owner of Smithfield Foods Inc. is selling shares in the biggest Hong Kong IPO since AIA Group Ltd.’s $20 billion offering in October 2010, according to data compiled by Bloomberg. WH Group originally planned to seek as much as $6 billion in the offering, people with knowledge of the matter said last month.

“The company may have to price shares near the low end of the range as investors are lukewarm toward initial offerings,” said Ronald Wan, chief China adviser at Asian Capital Holdings Ltd. “Investors have concerns about WH Group’s gearing and its use of IPO proceeds to repay debt.”

China’s meat consumption will slow from growth of more than 10 percent in the past few years, said Tommy Xiao, an analyst at agricultural researcher Shanghai JC Intelligence Co. The government is stressing the importance of eating vegetables and plans to boost the proportion of beef, lamb and chicken in the meat supply, according to a nutrition plan issued by the State Council in January.

Photographer: Jerome Favre/Bloomberg

C. Larry Pope, president and chief executive officer of Smithfield Foods Inc., left, and Wan Long, chairman of Shuanghui International Holdings Ltd., shake hands for a photograph before a news conference in Hong Kong on Oct. 10, 2013. Close

C. Larry Pope, president and chief executive officer of Smithfield Foods Inc., left,... Read More

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Photographer: Jerome Favre/Bloomberg

C. Larry Pope, president and chief executive officer of Smithfield Foods Inc., left, and Wan Long, chairman of Shuanghui International Holdings Ltd., shake hands for a photograph before a news conference in Hong Kong on Oct. 10, 2013.

Loan Repayment

WH Group plans to use the IPO proceeds to repay a syndicated loan, as well as for working capital, according to the terms. The company has an upsize option to increase the IPO size by as much as 20 percent by allowing more existing stock to be sold, in addition to the usual greenshoe or overallotment option, the terms show.

Kerry Holdings Ltd., CDH Investments Fund Management Co., New Horizon Capital and SBI Holdings Inc. are also selling shares in the offering, according to the terms.

WH Group changed its name from Shuanghui International Holdings Ltd. in January. Shuanghui International bought Smithfield Foods for $4.7 billion in September in the biggest Chinese purchase of a U.S. firm.

To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net Ben Scent, Tan Hwee Ann

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