Yum China Confidentially Files for $2 Billion Hong Kong IPO

The restaurant giant following in the footsteps of JD and NetEase.
Anthony RussoJun 19,2020,17:05

The restaurant giant Yum China Holdings, Inc. (NYSE: YUMC) has reportedly filed confidentially for an IPO that could raise roughly $2 billion.

The operator of KFC, Pizza Hut, and Taco Bell has submitted a stock listing application to the Hong Kong Stock Exchange in recent weeks, according to sources from a Bloomberg report today who asked to remain anonymous because the information isn’t public. 

The Shanghai-based company has been working with the bank's China International Capital Corp. and Goldman Sachs Group Inc. on the listing. That would follow Bloomberg’s original report from January, which included those firms and the same offering size of $2 billion.

The operator of 9,295 restaurants in China will look to be the next native-based U.S. listed large market cap firm to complete a secondary listing in Hong Kong. Earlier this month, the gaming giant NetEase, Inc. (Nasdaq: NTES; HKEX: 09999) completed listing in the city, raising $2.7 billion, followed by online retail titan JD.com, Inc. (Nasdaq: JD; HKEX: 09618) bringing in 3.9 billion.

In the three months through March, Yum China’s revenues were $1.75 billion, down 24% year-over-year. Its net income dropped more than 72% to $62 million in the first quarter from $222 million in the same period in 2019. 

As tensions are high between Beijing and Washington, the U.S. Senate has unanimously passed a legalization to delist Chinese companies trading on American bourses. However, the bill must clear the House of Representatives before signed into law by President Donald Trump. 

Chinese U.S. listed firms are now preparing for the worst and are weighing privatizations and/or looking to tap the Hong Kong market.

In early trading Friday, Yum China’s stock rose 3% higher to $52.01 per American depositary share. Shares of Yum China nearly 8% year-to-date.