Beijing-based alternative investment firm CDH Investments, the largest financial shareholder in Hong Kong-listed Chinese pork giant WH Group, is in the process of paying back a loan backed by part of its shareholding of WH Group, according to media reports.
In October 2014, CDH Investments took out a loan of US$500 million with its approximately 30% WH Group stake as collateral, in order to make capital distributions to the firm’s limited partners.
The current move to pay back the loan, which took place only three months after WH Group’s US$2 billion Hong Kong IPO, will clear some of the overhang over the stock and remove investors concerns over uncertainties of a large amount of the pork company’s stocks.
Representatives of CDH Investments did not respond to inquiries to confirm the news.
Shares of WH Group closed at HK$4.44 apiece on January 23, 2015, a 28% drop from its IPO price of HK$6.20.
Other shareholders of WH Group include a private equity unit of Goldman Sachs, which invested in WH Group in 2006, and held 2.42% of the company after the IPO.
Singapore’s state investment company Temasek Holdings and New Horizon Capital both invested in the company in 2009. They each held 1.44% and 0.14% of WH Group after the IPO, according to the company’s IPO prospectus.
The shareholders are all diluted during the IPO, during which they did not sell any shares.
WH Group, formerly known as Shuanghui International, is a majority shareholder in Henan Shuanghui Investment & Development Co., Ltd., China’s largest meat processing business.
In September 2013, WH Group acquired U.S. pork producer Smithfield International for approximately US$7.1 billion.