DealBook: Shares of Chinese Pork Producer Soar in Trading Debut

Photo Smithfield Foods, the biggest pork producer in the United States, became part of WH Group last year.Credit Bobby Yip/Reuters

HONG KONG — Who said pigs can't fly?

Shares in the world's biggest pork producer, WH Group of China, soared in their trading debut in Hong Kong on Tuesday, signaling renewed appetite among investors for Chinese initial public offerings.

WH Group's sizzling debut on the Hong Kong market — the stock closed 6.5 percent higher on a day when most other stocks fell — came just three months after it scrapped plans for a $5.3 billion share sale, which was abandoned in April despite an attempt to downsize the deal to $1.9 billion.

The earlier listing attempt was criticized as pricey and bloated, with an unprecedented 29 underwriters. The company tried again in July with only two underwriters — Morgan Stanley and Bank of China International — and a more modest price and fund-raising target.

The plan worked, with WH Group last week successfully raising 15.9 billion Hong Kong dollars, or $2.05 billion, by selling 2.567 billion new shares, or an 18 percent stake, in an I.P.O. priced at 6.20 dollars per share. That price compares with the price range of 8 to 11.25 dollars apiece the company had sought in April.

WH Group was created last year after Shuanghui International of China paid $4.7 billion in cash for Smithfield Foods, the biggest pork producer in the United States. That deal remains the biggest-ever buyout of an American company by a Chinese one.

Demand for the renewed offering was strong, with individual retail investors ordering 55 times as many shares as were initially allocated to them. The stock rose as high as 6.86 dollars at one point on Tuesday, more than 10 percent above the I.P.O. price.

WH Group plans to use the proceeds from the I.P.O. to help pay down a $2.5 billion loan it borrowed to fund the Smithfield acquisition.

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