Mr. Shangkong | Big-name banks no guarantee for IPO success

Shuanghui's US$6 billion share offering proves having many renowned global investment advisers on the job not a guarantee for success

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WH Group was initially forced to cut the size of its share offering before it was eventually cancelled because of cool market response.

Published: 5:45am, 5 May 2014Updated: 6:54am, 5 May 2014

The failure of top mainland pork producer Shuanghui's US$6 billion initial public offering - once slated to be Asia's biggest this year - offers at least two lessons - never overestimate the power of investment banks and never just go for big names.

Despite having a record 29 investment banks to help its listing in Hong Kong, including almost every big name that can be found on Wall Street, WH Group - previously known as Shuanghui - was initially forced to cut the size of its share offering before it was eventually cancelled because of cool market response.

Given Shuanghui's fame, especially after it acquired top US meat processor Smithfield Foods last year, as well as the renowned international and mainland investment banks involved in the share offering, the failure of the listing was much talked about by global investors from New York to Shanghai.

even received an e-mail from an American professor who said that if he could have more information, he could make it a case study for his MBA course. Sounds like a good idea.

About a decade ago, there were usually only three or four investment bank logos printed on the cover of a company's prospectus, including one or two lead banks, with the others taking roles as bookrunners.

WH's offering was widely considered overpriced, so its failure was anticipated

For Shuanghui, 29 bank logos occupied almost half of the cover of its prospectus. Some readers could have been excused for thinking it was a book about investment banking, and not about a company's initial share sale.