Chinese pork firm launched $5.3b IPO in Hong Kong

Ham capital

WH Group's history dates back to 1958, when it started operating as Luohe Cold Storage to process and store perishables in Luohe, in China's central Henan province.

The group listed its Henan Shuanghui Investment & Development Co Ltd unit in December 1998 in Shenzhen and owned 73.3 percent of the unit as of December 2013, with the remainder of the shares trading publicly.

The group's acquisition of Smithfield, completed in September last year, would help secure supplies to China, where WH Group expects will account for most of the world's pork consumption growth in the next few years.

The US company grew from a single meat-packing plant in 1936 to a global giant with nine slaughtering plants and the capacity to process one entire hog nearly every second. Its headquarters in Smithfield, a small town in Virginia state, is known as the "Ham Capital of the World."

Global pork consumption grew an average 1.97 percent a year from 2008 to 2012 and is forecast to expand 1.99 percent from 2012 to 2018, WH Group said in its preliminary prospectus, citing estimates from research firm Frost & Sullivan.

The bulk of the growth will come from China, where consumption is set to expand 3.1 percent a year through 2018, the company said.

In 2012, per capita consumption of animal protein in China reached 53.9 kilograms, paling in comparison to the 111.29 kilograms in the United States, according to the prospectus.

Hong Kong IPOs

The WH Group deal would nearly double IPO volumes in Hong Kong since the beginning of the year to $12.1 billion and lift the city past New York as the world's biggest venue for new listings so far in 2014.

About 80 percent of the offering consists of new shares from WH Group, with the rest to be sold by existing shareholders looking to reduce their stakes.

Selling shareholders include a subsidiary of Goldman Sachs , Singapore state investor Temasek Holdings and CDH Investments - one of China's biggest and oldest private equity firms.

Private equity firm New Horizons - founded by Winston Wen, son of China's former premier Wen Jiabao - will also be selling part of its stake, the term sheet showed.

Shuanghui to buy US pork producer	China announces pork purchase scheme