Wilmar unit’s RM8b offering likely biggest China 2019 IPO

by BLOOMBERG / pic by BLOOMBERG

SINGAPORE • Asian food giant Wilmar International Ltd plans to raise as much as US$2 billion (RM8.22 billion) by selling shares in its Chinese unit in what could be the biggest mainland initial public offering (IPO) this year.

Yihai Kerry Arawana Holdings Co is aiming to raise as much as 13.87 billion yuan (RM8.32 billion) by selling a stake of at least 10% on the tech-heavy ChiNext board of the Shenzhen stock exchange, according to a preliminary prospectus for the IPO.

That would be more than the estimated 10.5 billion yuan targeted by China Railway Signal & Communication Corp.

Wilmar, which gets more than half of its total revenue from the unit, plans to use the proceeds to finance 19 new projects in China, including soybean crushing units, flour mills and animal feed plants, according to the prospectus posted on the website of the China Securities Regulatory Commission.

The Singapore-based company, co-founded by billionaire Kuok Khoon Hong, has reiterated its confidence in China even as a deadly pig-killing virus cuts demand for animal feed.

Yihai Kerry Arawana, with 62 production bases in China, is the biggest competitor to state-run giant Cofco Corp in the world’s top food-consuming market.

Both of the companies processed 15.9 million metric tonnes of soybeans apiece last year, according to data from the China National Grain and Oils Information Centre.

Arawana, Wilmar’s flagship brand in Asia, has been the leading edible oil in China since the 1990s and has the largest share in the packeted consumer edible oil market, according to a DBS Bank research note.

The proposed China listing may unlock shareholder value and add an upside risk to its target price of S$3.86 (RM11.67), according to the note.

Wilmar traded in Singapore at S$3.82 a share yesterday, having gained about 22% so far this year.

Yihai Kerry Arawana posted revenue of 167 billion yuan in 2018 with a net profit of 5.52 billion yuan, according to the prospectus.

That compares to Wilmar’s full-year revenue of US$44.5 billion and a net profit of US$1.13 billion. — Bloomberg