Shuanghui International

Shuanghui adds 10 banks for Hong Kong WH Group listing

Pork giant Shuanghui recruits JP Morgan and Credit Suisse as part of syndicate for lucrative US$5 billion listing under WH Group name

PUBLISHED : Tuesday, 28 January, 2014, 1:35am
UPDATED : Tuesday, 28 January, 2014, 3:43am

Shuanghui International, China's biggest meat processor, which acquired American pork producer Smithfield Foods for US$4.7 billion last year, has added another 10 underwriting banks to the syndicate for its US$5 billion Hong Kong initial public offering, people familiar with the deal said.

In a bid to expedite the planned share sale, Shuanghui International - which will be listed as WH Group, a holding company created for the public offering that carries assets including Smithfield Foods and Shenzhen-listed Henan Shuanghui Investment & Development - has hired JP Morgan and Credit Suisse to join the syndicate team, bringing in a total of 16 joint bookrunners so far.

Bankers who have been working on the deal since last year said more banks were expected to be added to the Shuanghui listing given the unusually large size of the offering. The listing may happen as early as the second quarter, they added.

"A few newly joined banks will take up the role of being global co-ordinators, a prominent position in the deal," said a banker with direct knowledge of the situation.

Bankers in Hong Kong are putting a great deal of emphasis on the Shuanghui offering, which could be one of the largest deals this year, and investors are eager to make a bet on consumer stocks at the expense of banking stocks amid worries over asset quality.

Shuanghui's expanded syndicate team comes after the Henan-based company received listing approval from the Hong Kong stock exchange last week.

It wants to raise fresh capital to reduce its sizeable outstanding loans from last year's takeover of Smithfield, the world's largest pig farmer and pork processor.

The company, controlled by Wan Long, one of the mainland's richest men, borrowed US$4 billion in syndicated loans from a consortium of banks including Morgan Stanley and Bank of China.

Taking Smithfield's existing debt into account, Shuanghui's acquisition valued the US firm at US$7.1 billion, according to Dealogic.

The roles and fees the additional banks receive would depend on their lining up big investors before official marketing begins, the sources added.

The float underscores the mainland's rise to the world's second biggest economy, with mainland tycoons scouring the world for acquisitions to expand their businesses.

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.

Shuanghui's offering could provide a lucrative exit for early investors, including China's biggest private equity group, CDH Investments, which owns about 33.7 per cent of the company.