January 23, 2014

Shuanghui International considers dual-currency IPO in Hong Kong

With the acquisition of Smithfield Foods, Shuanghui International Holdings, which renamed itself as WH Group Ltd, is considering denominating its pending US$5 billion Hong Kong initial public offering (IPO) in two currencies, in what would be the first dual-currency IPO in the city. 

There is a small chance that WH Group Ltd. will seek to list and trade in both the yuan and the Hong Kong dollar, people with direct knowledge of the deal said. The company is leaning toward denominating the offering in just Hong Kong dollars because the IPO is aimed at paying down debt taken on-primarily in US dollars-to buy Smithfield for US$4.7 billion last year. Hong Kong's currency makes sense because it is pegged to the greenback.

Over the past few years, the Hong Kong Stock Exchange has encouraged companies to denominate in both currencies in view of growing demand outside mainland China for investment products denominated in the yuan, also known as the renminbi, or RMB. So far, there haven't been any takers.

"Our RMB IPO platform has been ready, and the decision to launch an RMB IPO is up to individual issuers," said Lorraine Chan, a spokeswoman for Hong Kong Exchanges & Clearing.

Shuanghui bought Smithfield last year in the biggest takeover so far by a Chinese company of a US firm.