WH to raise HK$15b in heavily oversubscribed IPO

PUBLISHED : Monday, 04 August, 2014, 10:54am
UPDATED : Monday, 04 August, 2014, 10:54am

Sino-US pork giant WH Group will raise net proceeds of HK$15.28 billion from its revived initial public offering on Tuesday on the Hong Kong stock exchange, based on its final offer price of HK$6.20 per share.

The company said in an announcement on the exchange’s website on Monday morning that it had received an enthusiastic response in Hong Kong for its IPO.

A total of 19,894 valid applications were received for 7.09 billion shares in the Hong Kong portion of the offering, 55.2 times the 128.37 million shares available, the company said.

Owing to “the very significant oversubscription” in Hong Kong, 128.37 million shares from the international offering will be reallocated to the public offering in Hong Kong, it said, doubling the number of shares available to 256.74 million, or 10 per cent of the total number of shares in the IPO.

The international portion of the IPO was “moderately over-subscribed”, the firm said.

The HK$15.28 billion in net proceeds is far less than the US$6 billion WH was seeking in an aborted Hong Kong IPO in April.

The heavily indebted company said it plans to use the proceeds of its IPO to repay part of a three-year syndicated loan with an outstanding principal of US$2.5 billion.

Last year, WH spent US$4.7 billion to acquire US pork producer Smithfield Foods in the largest Chinese acquisition of a US company.

The acquisition was seen as part of China’s quest for food security amid recent scandals over substandard meat on the mainland.

WH’s initial plans for an IPO in Hong Kong collapsed in April because of various factors, including poor market conditions, a disclosure of massive payments to two company executives and conflicting messages to investors from a record 29 investment bank bookrunners.

In contrast, Tuesday’s IPO is sponsored by only BOC International and Morgan Stanley.

Existing shareholders of WH – including Chinese private equity firms CDH Investments and New Horizons, US investment bank Goldman Sachs and Singapore sovereign wealth fund Temasek – have agreed not to sell their shares in the IPO.