Series of blunders forced WH to shrink IPO
Pork producer's decision to slash HK offering by two-thirds reflects over-ambitious pricing and poor market sentiment, say analysts
On the face of it, an initial public offering (IPO) for WH Group, the world's biggest pork company, should have been an easy sell.
China has huge and growing demand for pork, and WH, created when China's largest meat processing firm, Shuanghui International, acquired the world's biggest hog producer, Smithfield Foods, it was well placed to deliver growth in a highly fragmented market.
But this week, WH slashed its proposed IPO by two-thirds to US$1.9 billion - a result, fund managers and bankers say, of the company and its owners seeking too high a price, hiring too many underwriters (a record 29), and negative publicity over some sky-high executive compensation.
The company also had sheer bad luck, as sentiment towards new listings slid worldwide.
[WH] was a little too aggressive in the early stage of their marketing process
"The company was a little too aggressive in the early stage of their marketing process. They were hungry for a large deal at quite a demanding valuation, plus the market, near term, didn't turn in their favour," said Tony Chu, a Hong Kong-based portfolio manager at RS Investments.
