Yum China Secures Nod For Mega Hong Kong Second Listing

Yum China Holdings Inc. has received the green light from the Hong Kong stock exchange for its proposed second listing, people familiar with the matter said, adding to the list of billion-dollar share sales in the Asian financial hub.

China’s largest restaurant company, which runs outlets in the country of U.S. brands including KFC, Pizza Hut and Taco Bell, is considering gauging investor demand for the share sale as soon as next week, one of the people said, asking not to be identified because the information is private. Yum China could raise about $2 billion, Bloomberg News has reported.

Details of the offering are not final and could change, the people said. A representative for Yum China declined to comment.

The New York-listed fast-food giant has been working with Goldman Sachs Group Inc. and China International Capital Corp. on the listing, Bloomberg News has reported. Citigroup Inc., CMB International Capital Corp. and UBS Group AG are also arranging the deal, people have said.

Yum China would join a growing slate of companies aiming for a trading foothold in Hong Kong as relations between the U.S. and China come under significant strain. U.S. regulators are threatening to restrict Chinese firms’ access to American capital markets if they do not allow authorities to review their audits.

Hong Kong is riding a wave of investor enthusiasm, which encompasses second listings as well as debuts such as the planned initial public offering by China bottled water giant Nongfu Spring Co. The company plans to price its IPO in the city at the top of its marketed range, people familiar with the matter told Bloomberg News.

Yum China operates 10,000 restaurants in over 1,400 cities across China, according to its website. The company reported a sputtering recovery from the effects of the coronavirus pandemic, with sales improving in April and May but weakening again in June, according to its latest earnings. It said comparable sales in the second quarter fell 11% from the previous year, and it expects them to remain under pressure in the third quarter.

China’s economy is recovering from the Covid 19-induced slump faster than many other countries. Consumer spending on items such as cars outpaced that of catering, which was down 11% in July.

The product of a spinoff from Yum! Brands Inc. in 2016, Yum China’s U.S. shares have risen 15% so far this year, whereas the S&P 500 is up 7.9%.

Bloomberg