WH Group Raises US$2.05B in Second Hong Kong IPO Attempt

WH Group Ltd., a pork producer based in China, has finally pushed through with its initial public offering, raising US$2.05 billion amid a recent rally in Asian shares which saw Asia's regional benchmark index reaching a six-year high amid optimism over corporate earnings.

The deal size could reach US$2.36 billion if WH Group opts to sell additional shares after listing. The group plans to list on the Hong Kong Stock Exchange on Aug. 5, according to its prospectus.

It is the second-largest IPO this year in the city, following a US$3.11 billion January IPO by HK Electric Investments Ltd., according to Dealogic.

When WH Group began marketing its listing on the Hong Kong stock exchange in April, the indicative pricing implied total proceeds of as much as US$5.3 billion, overshadowed only by the US$8.7 billion that Kraft Foods raised in 2001.

But investors were skeptical. In the same month, WH Group cut the size of its offering by two- thirds, aiming to raise only US$1.9 billion at the higher end of the indicative pricing.

But even that failed to whet investor appetite. On 29 April, just 14 days after releasing the IPO prospectus, the listing was pulled. “In light of deteriorating market conditions and recent excessive market volatility, the Company, having consulted the Joint Sponsors, has decided that the Global Offering will not proceed at this time,” the WH Group said.

When WH Group first launched the offering, it had WH Group’s 29 underwriters – the most numerous ever in IPO history. For the second attempt, the group settled for only two: Morgan Stanleyand BOC International, the investment-banking arm of Bank of China Ltd.

Tuesday's price represents 11.5 times forward 2014 earnings, rather than the 15 times to 20.8 times implied by the price range set in the original attempt, reports the Wall Street Journal.


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