WH Group Seeks Up to $1.9 Billion in Reduced-Size Hong Kong IPOFox Hu
WH Group Ltd., the world’s biggest pork supplier, is seeking as much as $1.9 billion in a Hong Kong initial public offering, cutting the deal size 64 percent as investors shun new equity.
The company is offering about 1.3 billion new shares at HK$8 to HK$11.25 each, according to revised terms for the sale obtained by Bloomberg News. Existing shareholders aren’t selling any stock in the deal, the terms show.
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 3.4 percent this year, the second-worst performance among developed markets, according to data compiled by Bloomberg.
The Chinese owner of Smithfield Foods Inc. and existing investors were originally seeking as much as $5.3 billion in the IPO, according to a prospectus earlier this month. WH Group planned to sell about 2.92 billion new shares at the same price range, while owners including Goldman Sachs Group Inc. and Temasek Holdings Pte were offering a combined 731 million shares, the prospectus shows.
The pork producer plans to set a final price for the IPO on April 29 and start trading on May 8, the revised terms show. The company was due to set the final price for the IPO yesterday and start trading April 30, according to the prospectus.
At $5.3 billion, the WH Group IPO would have been Hong Kong’s biggest since October 2010, when AIA Group 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.
The Chinese company, which changed its name from Shuanghui International Holdings Ltd. in January, planned to use as much as $4 billion of the IPO proceeds to repay a syndicated loan, the prospectus showed. 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.