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Food & Beverage

Singapore agribusiness giant Wilmar joins China IPO rush

Core subsidiary to raise $2bn in Shenzhen listing partly from state funds

Wilmar has a distribution network covering more than 50 countries and regions with its largest operations in China.    © Reuters

SINGAPORE -- Singapore-based agri and food business company Wilmar International said Thursday it would raise about 13.9 billion yuan ($2 billion) through a listing of its core Chinese subsidiary, becoming the latest major international company joining the booming Chinese IPO market.

Wilmar's subsidiary, Shanghai-based Yihai Kerry Arawana Holdings, is expected to be listed on the Shenzhen Stock Exchange by mid-October, according to the company's announcement.

Wilmar, with a distribution network covering more than 50 countries and regions, has its largest operations in China. Yihai Kerry Arawana is one of the major agribusiness and food processing companies in the country, Wilmar said, and its businesses include the processing and sales of kitchen food and feed ingredients. The subsidiary's operating profit for the first half of 2020 reached 3.86 billion yuan, more than double from a year ago.

Singapore-listed Wilmar first announced the subsidiary's IPO plan last year and has been working on details. Last week, it said the subsidiary received final registration approval for the listing from the China Securities Regulatory Commission.

It currently owns 99.99% of the subsidiary and will issue new shares that account for 10% of the total through the IPO, at 25.7 yuan per share, meaning the market value of the subsidiary would reach around $20 billion.

Of the shares to be sold, 30% will be allocated to a total of 20 strategic investors, comprising Chinese state-owned funds, Singapore government fund GIC and China Life Insurance, Wilmar said.

The Chinese IPO market has been booming recently as it recovers from the effects of the COVID-19 pandemic, with big companies rushing to raise funds through listing shares. Chinese fintech giant Ant Group is awaiting a dual-listing on the Shanghai and Hong Kong exchanges. Some Chinese companies already trading in the U.S. have turned to secondary listings in Hong Kong amid Washington's increasing pressure on Chinese corporations.

Wilmar has said the IPO is intended to further the growth of its China operations as well as to unlock shareholder value for Wilmar itself. Wilmar's current market value is about $20 billion, 15% higher than a year ago.

Singapore's Oversea-Chinese Banking Corp. noted in a report dated Sept. 17 that Wilmar has strong penetration in China and the performance of its core business is expected to remain resilient despite the pandemic, the bank said "We believe the IPO will unlock value for Wilmar's shareholders and further grow Wilmar's business in China."

Wilmar's business activities include oil palm cultivation, edible oils refining, manufacturing of consumer products as well as flour and rice milling. Its shares ended 1.6% lower in morning trading.

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