Shuanghui International, China’s largest meat processor, plans to apply as early as next week for a listing on the Hong Kong stock exchange to raise up to US$6 billion, making it one of the biggest initial public offerings in Asia in years, people close to the situation say.
They told the South China Morning Post Shuanghui would file the A1 form, the official listing application, to Hong Kong Exchanges and Clearing next week and wait for a hearing after the Lunar New Year. If successful, the firm would list no later than April, the sources said.
“So far so good. Everything is on schedule. We will submit A1 next week, and then everybody can go for a nice holiday,” one of the people said on Sunday, referring to the Lunar New Year holiday starting on January 31.
“After we are back, things will speed up, especially after we go through the IPO hearing,” the source said.
Shuanghui’s plan for a Hong Kong IPO comes less than five months after it completed its US$4.7 billion acquisition of Smithfield Foods, the biggest pig farmer in the United States.
Smithfield would be a core asset to be included in the IPO, said the sources, who declined to be named as the IPO process remained private and confidential.
One of them said the six investment banks hired by Shuanghui to sponsor its Hong Kong IPO had already been in touch with several potential major cornerstone investors.
The six include two major mainland securities houses – China Citic Securities and BOC International – and four foreign banks – Goldman Sachs, UBS, Morgan Stanley and Standard Chartered – the sources said.
Market sources expect the stock offering to be a popular one, partly because of mainland consumers’ positive reception to Shuanghui’s US acquisition. Mainland China has struggled with food safety issues for years, ranging from melamine-tainted milk powder to the use of the controversial growth-promoting food additive ractopamine with animals to be slaughtered for their meat.
As demand for quality meat rises in China, the takeover of Smithfield combines Shuanghui’s strength – its sales and distribution channels on the mainland – with a supply of raw meat from its counterpart in the US, where the demand for pork is decreasing.
Given the size of Shuanghui’s planned IPO, bankers expect the offering to boost investors’ confidence in Hong Kong’s stock market, where more listings may be in the offing.