Yum China Receives Approval for a Secondary Listing in Hong Kong, Seeking up to $2.5B

yum-china-hong-kong
(Source: Lu Zhao/Pandaily)

Yum China Holdings Inc received approval on Friday from the Hong Kong stock exchange for a secondary listing in the city, which will happen as soon as next week. The company is seeking to raise up to HK$19.6 billion ($2.5 billion) from the listing.

The New York-listed company said in a U.S. regulatory filing that it plans to sell 41.91 million shares in the offering, at a maximum offer price of HK$468 per share. Yum China plans to use about 45% of the proceeds to expand its restaurant network, another 45% on technology systems, supply chain, food innovation and “high-quality assets,” while the rest will be spent for working capital and general corporate purposes.

In June, Bloomberg estimated that the company could raise about $2 billion in its Hong Kong listing.

SEE ALSO: Yum China to Sponsor Beijing 2022 Winter Olympics

Goldman Sachs Group Inc. is the sole sponsor of the listing, the filing shows. Citigroup Inc., CMB International Capital Ltd. and UBS Group AG are joint global coordinators. ABC International Holdings Ltd., AMTD International Inc., BOC International Holdings Ltd., China International Capital Corp., CLSA Ltd., HSBC Holdings Plc and ICBC International Holdings Ltd. serve as joint book-runners in the deal.

Yum China, which runs franchises in the country for a series of US fast-food companies, such as KFC, Pizza Hut and Taco Bell, was spun off from Yum! Brands Inc. and listed in New York four years ago. The company now operates 10,000 restaurants in more than 1,400 cities across China.

The company said its revenue declined 11% year over year to $1.9 billion in the second quarter of 2020. Its shares fell nearly 2% after the company said a resurgence of COVID-19 cases in some areas of China affected its second-quarter results.

Hong Kong Exchanges & Clearing Ltd. (HKEX) reported earlier record profits for the first six months of the year as a number of Chinese companies depart the US market and seek listings in the city. The exchange said its net income rose 1% to a record HK$5.23 billion ($674 million), or HK$4.15 per share in the first half of 2020, beating analysts’ estimates of HK$4.9 billion in a Bloomberg poll. It also reached a record revenue of HK$8.78 billion, up 2% year on year.

Chinese e-commerce giant JD.com raised $3.87 billion in its Hong Kong secondary listing in June, the city’s biggest so far this year.