Yurun boss cashing out HK$961m

PUBLISHED : Friday, 24 July, 2009, 12:00am
UPDATED : Friday, 24 July, 2009, 12:00am

Zhu Yicai, the chairman of China Yurun Food Group, the mainland's biggest hog processor, sought yesterday to raise as much as HK$961 million from a share placement through Morgan Stanley and UBS.

The placement came as the stock reached a 52-week high.

Mr Zhu was offering 70 million existing China Yurun shares at H$13.23 to HK$13.73 each, representing a discount of 4 to 7.5 per cent to the stock's closing price of HK$14.30 yesterday, according to a sales document sent to institutional investors.

In addition to the chairman's stake sale, China Yurun was also attempting to raise up to HK$1.78 billion by selling 130 million new shares with the same offering terms in a top-up placement, the document shows.

Following the completion of the selldown and the new share offering, Mr Zhu's holding is expected to be reduced to 47.53 per cent from 51.63 per cent.

Shares of China Yurun climbed as much as 4.5 per cent to a 52-week high of HK$14.50 before slipping back to close 3.03 per cent above the previous closing price. The stock has advanced 57 per cent since the beginning of the year.

The Hang Seng Index closed 2.96 per cent higher at 19,817.7 points, less than 200 points from the psychological level of 20,000 points.

Big investors have been attempting to reduce their exposure to equities over the past two weeks, given the strong market momentum and relatively favourable stock valuations.

Senior management of China Dongxiang (Group), including chief executive Qin Dazhong, chairman Chen Yihong and his wife, raised HK$853 million by reducing their stakes in the sportswear brand management firm through a share placement on Tuesday.

On the same day, state-owned Sinochem Corp tapped the market to raise HK$773 million from a stake sale in property developer Franshion Properties (China).

JP Morgan said in a report on Tuesday that it had upgraded China Yurun to an 'overweight' rating, saying the company should benefit from higher hog prices.

Good timing

Firm also selling 130 million new shares as stock hits year high

The food producer hopes to raise funds in the amount of, in HK$: $1.78b