* IPO planned for second quarter of 2014 -IFR
* Would provide an exit for CDH, other investors
* IPO could value Shuanghui-Smithfield at about $20 bln
* Could be the biggest Asia-Pacific IPO in about 4 years
By Fiona Lau and Denny Thomas
HONG KONG, Nov 6 China's Shuanghui International
Holdings, which bought U.S. pork producer Smithfield Foods Inc
this year, has hired banks for a Hong Kong IPO, seeking to raise
up to $6 billion in what could be the region's largest stock
offering in four years.
An IPO would allow Shuanghui to pay down debt borrowed for
the $4.7 billion Smithfield purchase and provide an exit for
investors such as CDH, one of China's biggest and oldest private
equity firms which has long aimed to sell its stake in the
The potential deal size is subject to change. While one
source familiar the matter said it could go as high as $6
billion, another said it was more likely to be in the $3-4
"The IPO will give a platform for existing shareholders to
cash out of their investments, but it will have limited impact
on the operations of the company," said Anson Chan, an analyst
at KGI Securities.
"But the IPO will be a milestone in Shuanghui's journey from
a local company to an international food company, which
underscores the maturing of China's food industry," he said.
Chan currently does not rate the company.
The listing, expected in the second quarter of 2014, would
follow an up to $5 billion IPO for the Hong Kong electricity
business of tycoon Li Ka-shing's Power Assets Holdings Ltd
. Both deals would be a major boost for the Hong Kong
stock exchange, which has seen public offering volumes drop over
the last two years.
Shuanghui has tapped BOC International, Citic Securities
International, Goldman Sachs, Morgan Stanley
, Standard Chartered and UBS to lead
the IPO, sources familiar with the matter said. The news was
first reported by IFR, a Thomson Reuters publication.
The bank line-up is not final, one person familiar with the
A representative for Shuanghui said in an email the company
would not comment on any enquiries related to a possible IPO.
$20 BLN COMPANY
Plans for an IPO by Shuanghui were first revealed by Reuters
in July when sources said the combined Shuanghui-Smithfield
company would have a value of about $20 billion.
The Smithfield purchase was the largest ever acquisition of
a U.S. company by a Chinese firm, bringing together the world's
biggest hog producer and China's largest meat processing company
- Shuanghui-owned Henan Shuanghui Investment & Development Co
Including debt, the deal was valued at $7.1 billion. Bank of
China and Morgan Stanley together provided $7
billion of loans to finance it.
Despite political opposition in the United States, the deal
closed in September, allowing Shuanghui to directly sell
Smithfield pork goods across China to meet the country's huge
demand for the product. Together Henan Shuanghui and Smithfield
garner about $18 billion in annual revenue, based on their last
year's sales figures.
China's CDH Investments owns 33.7 percent of Shuanghui
International through several funds and has been invested in the
company since about 2005. The meat processor also counts New
Horizons, founded by Winston Wen, the son of China's former
premier Wen Jiabao, as a private equity investor. New Horizons
owns 4.2 percent.
Goldman Sachs' main investing arm has a 5.2 percent
stake, public filings showed. Singapore state investor Temasek
Holdings has a 2.8 percent holding.
An exit from Shuanghui would be reminiscent of CDH and
Goldman's Hong Kong IPO of Nanjing-based China Yurun Food Group
Co Ltd in 2005, a similar but smaller producer of
fresh and frozen meats, including pork.
Hong Kong stock exchange rules require one year of ownership
before a merged entity can list, though companies can apply for
a waiver to seek an earlier deal. IFR said the IPO is expected
in the second quarter of 2014.
At $6 billion, the IPO would be the biggest in Asia Pacific
since AIA Group's $20.5 billion listing in October 2010.
As part of the Smithfield acquisition, Shuanghui also
inherited a 37 percent stake in Spain's Campofrio Food Group SA
. It has since scaled back that holding to avoid making
a forced takeover under local regulations, although some
analysts believe it could make a takeover bid in the future.