Yum China is in talks with banks about a Hong Kong secondary offering, in what would be the latest in a flurry of US-listed Chinese companies choosing to raise money in the city.
The company, which operates KFC, Pizza Hut and Taco Bell restaurants in China, will invite investment banks to pitch to be advisers for the potential listing later this week, according to people familiar with the matter.
One person with knowledge of Yum China’s plans said the listing could be worth up to $2bn and that the company would listen to proposals from investment banks on Friday.
A number of Chinese companies that trade in New York have been rushing to sell shares in Hong Kong against a backdrop of increasing friction between Beijing and Washington.
Gaming group NetEase debuted in Hong Kong last week after raising nearly $3bn, while ecommerce business JD.com, the ecommerce group, will begin trading in the city on Thursday following an offering to institutional investors worth about $3.9bn.
The Trump administration has increased scrutiny of Chinese companies that list in the US. Proposed legislation would forcibly delist businesses that fail to comply with American accounting standards, while President Donald Trump has announced a probe into Chinese groups listed in the US.
Investment bank China Renaissance estimated last week that more than $1tn worth of Chinese listings on Wall Street could be affected by Congressional moves. It identified more than 30 US listings of Chinese companies that qualified for secondary offerings in Hong Kong, including tech groups Baidu, Pinduoduo and iQiyi.
Selling shares in Hong Kong gives companies closer proximity to China’s huge investor base while also allowing them to maintain a strong link with global capital markets. The Hong Kong dollar, unlike mainland China’s renminbi, is freely convertible and pegged to the greenback.
The recent wave of listings has also provided a boost for Hong Kong. The Asian financial hub has been rocked by months of anti-government protests and has increasingly become a battleground within US-China tensions.
Yum China, which had 9,200 restaurants as of the end of last year, was split off from its US parent and listed on the New York Stock Exchange in 2016.
The company has been hit hard by the coronavirus pandemic. It warned in February that it could report an operating loss this year after the fast-food group closed some of its restaurants due to the outbreak.
Its first-quarter revenues fell 24 per cent year on year to $1.7bn, while net income plunged 72 per cent year on year to $62m.
In 2018, the company was the target of a failed $17bn buyout offer from a consortium of private equity players led by Hong Kong-based Hillhouse Capital.
Yum China said: “As a matter of policy, we do not comment on rumours or market speculation regarding these sorts of matters.”