Shuanghui Group (it’s known as Shineway Group in English-speaking countries) is a privately owned meat processing company which is the largest meat producer in China. In May 2012, Shuanghui made a US$4.7 billion offer for Smithfield Foods, a US-based pork group.
Shuanghui to apply next week for US$6 billion Hong Kong IPO, sources say
Shuanghui's planned New Year initial public offering, one of the biggest in Asia, will pay down debt following Smithfield acquisition
George Chen and Ray Chan
Shuanghui International, China's largest meat processor, plans to apply as early as next week for a listing on the Hong Kong stock exchange to raise up to US$6 billion, making it one of the biggest initial public offerings in Asia in recent memory, said people familiar with the situation.
Shuanghui's plan for an offering comes less than five months after its US$4.7 billion acquisition of Smithfield Foods, the biggest pork producer in the US, vaulting the Henan-based company into the top ranks of firms involved in the processing of meat and meat products.
The float underscores China's rise to the world's second biggest economy as mainland tycoons scour the world for acquisitions to expand their business.
Company sources told the South China Morning Post that Shuanghui would file an A1 form, the official listing application, with Hong Kong Exchanges and Clearing next week and wait for a hearing after the Lunar New Year. If successful, the firm would list no later than April.
"So far so good. Everything is on schedule," said one company source.
Smithfield is expected to be included in the offering.
The six investment banks hired for the listing include two major mainland securities houses - China Citic Securities and BOC International - and four large foreign banks - Goldman Sachs, UBS, Morgan Stanley and Standard Chartered, sources said.
Market sources expect the stock offering to be popular as domestic demand for quality meat rises in lockstep with China's economic expansion.
The Smithfield acquisition combines Shuanghui's strength - specifically its sales and distribution channels on the mainland - with a supply of raw meat from the US, where the demand for pork is decreasing.
Given the size of the planned offering, bankers expect it to boost investor confidence in Hong Kong's stock market.
The offer would enable the company - controlled by Wan Long, one of the mainland's richest men - to pay down outstanding debt, including Smithfield's net debt of US$2.4 billion, as well as a US$4 billion syndicated loan.
In addition to the deleveraging process, Shuanghui's offering could provide a lucrative exit for early investors, including China's biggest private equity group CDH Investments and New Horizons, in which Winston Wen, the son of former premier Wen Jiabao, was a co-founder.
CDH Investments has owned about 33.7 per cent of Shuanghui International through a number of investment vehicles since 2005, while New Horizons owns about 4.2 per cent, public filings showed.
Goldman Sachs also owns about 5.2 per cent, while Singapore's state investor Temasek has a 2.8 per cent stake.