CDH-backed WH Group files for HK IPO

The Chinese pork company, which acquired US-based Smithfield last year, could raise up to $4.3bn.

Chinese pork giant WH Group, formerly known as Shuanghui International, has filed an application with the Hong Kong Stock Exchange for its long-awaited initial public offering, which could provide an exit for private equity partial-owner CDH Investments, according to an HKEx document released today.

CDH owns about 33 percent of the business.

The filing is still in draft form, providing initial information to the public rather than for investment purposes – as required under new rules implemented by the Hong Kong exchange – but indicates the business has cleared at least the preliminary approval hurdles for an IPO in the special administrative region, a source close to the exchange confirmed.

Although no specific numbers were released in the draft prospectus, media has estimated the company is hoping to raise as much as HK$32.9 billion ($4.3 billion; €3.11 billion), selling 2.923 billion new shares in an indicative range of HK$8.00-11.25 per share.

Shaunghui is widely acknowledged as the largest pork producer in China, the country expected to account for 80 percent of global pork consumption growth over the next five years, according to consulting firm Frost & Sullivan.

The business also completed one of the most high-profile cross-border deals in China last year, acquiring a 100 percent interest of Smithfield Foods, a US pork producer, a transaction worth $4.9 billion in equity. The deal created some controversy in the US as regulators raised concerns over food safety standards in China, but was ultimately pushed through despite objections. 

It is unconfirmed if the IPO will represent an exit for private equity backer CDH Investments, although industry sources largely expect it to.

CDH did not respond to requests for comment by press time, but has previously declined to comment on the upcoming exit.

The firm recently closed its latest private equity fund oversubscribed on $2.55 billion – less than a year after its launch, Private Equity International reported earlier. The vehicle, CDH's fifth of its kind, was originally targeting $2 billion to invest in Greater China, with a $2.5 billion hard cap.