UPDATE 1-Watson IPO likely for 2014 in HK and 2nd venue -Li Ka-shing

Fri Feb 28, 2014 3:06am EST

* Retail unit Watson IPO expected within 2014-Li Ka-shing

* IPO could raise close to $6 billion at current valuations (Adds Li's comments, details on Watson, HK offerings)

HONG KONG Feb 28 (Reuters) - The initial public offering of retailer A.S. Watson Co will likely happen this year with Hong Kong as one of the venues for the planned dual listing, billionaire Li Ka-shing said on Friday.

The 85-year-old tycoon has been reviewing strategy options for Watson, which is owned by his Hutchison Whampoa Ltd conglomerate, with the funds from the potential IPO set to be used to fuel a major drive in health and beauty products in China.

The listing could value the company at about $23 billion, Reuters reported last year. If 25 percent of A.S. Watson is floated, a standard Hong Kong IPO percentage, the IPO could raise close to $6 billion.

"A.S. Watson will have to be a dual listing and it is a must in Hong Kong," Li said at a news conference to discuss the results of his Hutchison Whampoa Ltd and Cheung Kong (Holdings) Ltd conglomerates.

"A.S. Watson is a big business. For listing one of the places must be Hong Kong. I can't tell you exactly the time. I hope it can make it for this year. What I can say is within this year."

The strategic review for the retail business came about last year after Li scrapped the sale of Hong Kong supermarket chain ParknShop. The Watson retail arm includes ParknShop, Watsons, Superdrug and Kruidvat personal care stores, Fortress electronic appliance outlets, and chains selling food and wine and luxury and cosmetic products.

Bank of America Merrill Lynch, HSBC and Goldman Sachs were appointed last year to conduct the strategic review of the retail business.

Li did not comment on the potential size of the IPO, but bankers expect it would be among the largest deals in Hong Kong this year. Other big-ticket IPOs include an up to $6 billion listing from Chinese meat processor WH Group and a $2 billion offer from Chinese carmaker BAIC Motor, backed by Daimler AG .

With major economies picking up steam and companies chasing funds to tap into growth opportunities, advisory firm PwC estimates Hong Kong IPOs could raise $32.2 billion in 2014, the highest since 2010 and nearly double the 2013 tally of $17.1 billion.

(Reporting by Hong Kong bureau; Writing by Elzio Barreto; Editing by Matt Driskill)

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