Chinese pork producer WH Group (萬洲國際) has canceled a planned listing in Hong Kong, blaming “deteriorating” conditions, but analysts said its failure was mainly due to a lack of appetite for the firm, rather than a reflection of the territory’s initial public offering (IPO) market.
The world’s biggest pork firm earlier this month said it hoped to raise up to US$5.3 billion with a share sale planned for yesterday, which would have been the world’s biggest in a year and the territory’s largest since 2010.
However, warning bells rang last week when it slashed the offering by two-thirds to US$1.88 billion and put nethe listing back a week, blaming concerns about the strength of the stock market.
Then, late on Tuesday, WH Group said it had pulled the plug completely.
“In light of deteriorating market conditions and recent excessive market volatility, the company has decided that the global offering will not proceed at this time,” the firm said in a statement.
However, analysts said the lack of interest in the firm — which last year bought US giant Smithfield Foods Inc in a multibillion-dollar deal — was not particularly down to a weak Hong Kong market.
“Even if it is the biggest [pork company] in the world, it is not as sexy” to investors compared with other listings, Tanrich Securities vice president Jackson Wong (黃志陽) said. “It’s all about sentiment... if there are more attractive names in the IPO market, I think people’s enthusiasm about IPOs can turn on like a switch.”
Core Pacific Yamaichi head of research Castor Pang (彭偉新) said traders did not see a lot of “upside potential in the short term” in the company, with proceeds of the listing to be used to repay debt.
“I don’t think the backtrack of WH [Group’s] IPO will have a negative impact on the IPO activities this year,” Pang said, adding that there have been a variety of businesses that have recently listed in the territory.
Hong Kong was the world’s top IPO venue from 2009 to 2011, before losing ground to competitors in recent years. However, it has seen a pickup this year — especially for some less orthodox companies.
Magnum Entertainment, the first nightclub operator to list in Hong Kong, saw its HK$126 million (US$16.25 million) IPO oversubscribed 3,500 times. Its share price soared 90 percent on the first day.
Fu Shou Yuan International Group Ltd (福壽園國際集團), the largest Chinese funeral services provider, saw its US$215 million IPO in December last year oversubscribed by nearly 700 percent.
In January, a utility trust owned by Asia’s richest man, Li Ka-shing (李嘉誠), raised US$3.11 billion.
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