Singapore-based agribusiness group Wilmar International has elected to float shares in its mainland subsidiary on the Hong Kong market in preference to a Shanghai listing, according to a source. Wilmar, which mainly produces cooking oils, has asked its financial advisers, Bank of China International, Goldman Sachs and Morgan Stanley, to prepare the Hong Kong share sale, which is tipped to raise US$3 billion to US$4 billion. 'The deal has moved from a feasibility study to 'let's execute this as soon as we can',' said the source. The offering is expected in the first half of next year. The company said in May it was studying the feasibility of selling 20 to 30 per cent of its mainland business in either Shanghai or Hong Kong. The choice of Hong Kong is likely to delight local regulators and disappoint Beijing, which is vying with Hong Kong to encourage large foreign multinationals to sell shares on the Shanghai Stock Exchange to build the city's credentials as a modern financial hub. Deputy Commerce Minister Chen Jian said earlier this month that his ministry would 'actively guide high-quality foreign firms to go public in China', and HSBC chief executive Michael Geoghegan has committed publicly to a Shanghai listing. The New York Stock Exchange is studying plans to list in Shanghai. But Hong Kong has many advantages including allowing foreign investors easy access to its market, which they cannot do in Shanghai. 'Most of the major investment funds are based in Hong Kong and it is an easier place to get [initial offerings] done,' the source explained. In Hong Kong, firms can go public any time as long as they meet a minimum HK$50 million profit threshold and the deal is structured acceptably. The Shanghai exchange, which was shut in September last year, has just reopened for new listings and China State Construction Engineering Corp will soon launch the mainland's first jumbo listing of the year, aiming to raise US$6.3 billion. Foreign investment funds wishing to buy into Shanghai flotations have to go through a complex and time-consuming approval process as qualified foreign institutional investors, and retail investors outside the mainland are barred from taking up A-share initial public offerings. Wilmar is one of the world's biggest agribusinesses, employing 70,000 staff in 20 countries. Its largest businesses are in Indonesia, Malaysia, China, India and Europe. The group owns vast swathes of palm oil plantations, processes edible oils and sells consumer products. Its Arawana brand is China's best-selling cooking oil. Its mainland business posted sales of US$14.33 billion last year, up from US$8.48 billion in 2007. Net profit was US$600 million. The Hong Kong share sale may value the China subsidiary at up to US$14 billion. Wilmar, like the South China Morning Post, has strong connections to the Kuok family. Wilmar's second- and third-biggest shareholders are PPB and Kerry Group, which owns the majority of the Post.
