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WH Group Said to Consider Cutting $5.3 Billion IPO in Half

WH Group Ltd., the world’s biggest pork supplier, is considering cutting the size of its planned $5.3 billion Hong Kong initial public offering by more than half as investors shun new equity, people with knowledge of the matter said.

The company may sell new shares equivalent to 10 percent of its enlarged market capital, about half of what it previously planned, the people said yesterday, asking not to be identified as the information is private. Existing investors including Goldman Sachs Group Inc. (GS) may also refrain from selling stock as part of the IPO, the people said.

WH Group follows Japanese hotel owner Seibu Holdings Inc. and Weibo Corp., operator of a Chinese microblogging service, in paring their IPOs this month. Hong Kong’s benchmark Hang Seng Index has fallen 3.3 percent this year, the second-worst performance among developed markets, according to data compiled by Bloomberg.

The pork producer may reduce the size of its IPO, which would result in a short delay to the listing, it said in a statement to the Hong Kong stock exchange today. The offering will lapse if the company doesn’t set a final offer price by April 28, according to a prospectus filed earlier this month.

WH Group was due to set the final price for the IPO yesterday and start trading April 30, according to the prospectus. A Hong Kong-based external spokesman for WH Group declined to comment. A spokeswoman for Goldman Sachs didn’t immediately return a call seeking comment.

Most Underwriters

At $5.3 billion, the WH Group IPO would have been Hong Kong’s biggest since October 2010, when AIA Group (1299) Ltd. raised $20 billion, according to data compiled by Bloomberg. The company struggled to attract investors even after hiring 28 underwriters, the most ever for an IPO in the city.

WH Group and owners including Temasek Holdings Pte and Goldman Sachs were offering about 3.65 billion shares at HK$8 to HK$11.25 each, the prospectus shows. The company planned to use as much as $4 billion of the IPO proceeds to repay a syndicated loan, the document shows.

WH Group was planning to sell 2.92 billion new shares in the IPO, accounting for 20 percent of the stock outstanding after the sale, according to the prospectus. Existing owners were selling an additional 731 million shares. The company plans to keep the price range unchanged, the people said.

Smithfield Purchase

The Chinese company 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.

The offering is Hong Kong’s first multibillion-dollar IPO without cornerstone investors since December 2011, when Chow Tai Fook Jewellery Group Ltd. raised $2.1 billion. Cornerstone investors typically agree to hold on to their shares for six months in return for guaranteed allocation of stock in an IPO.

Companies that completed IPOs in Hong Kong this year have fallen on average 4.8 percent from their offer prices after adjusting for deal size, according to data compiled by Bloomberg.

Seibu owners raised 44.5 billion yen ($434 million) in an IPO last week, after initially seeking as much as 186 billion yen. Beijing-based Weibo raised 40 percent less than it originally sought in the U.S., according to data compiled by Bloomberg.

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, Dave McCombs

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