Yum China Holdings, Inc. (NYSE: YUMC) has priced its $2.23 billion secondary listing in Hong Kong.
The operator of KFC, Pizza Hut, and Taco Bell in China said in a statement today that it will issue 41.91 million shares priced at HK$412 (around $53.16) each. The pricing represents a roughly 5% discount from its close on Thursday in New York.
The offering size is slightly above the anticipated $2 billion target.
Yum China gave the international underwriters an option to buy an additional 6.29 million shares, which would bring the proceeds to roughly $2.56 billion.
Goldman Sachs (Asia) L.L.C., Citigroup Global Markets Asia Ltd., CMB International Capital Ltd., and UBS AG (FBG) Hong Kong Branch are securing the deal.
Yum China said it intends to use the proceeds for the expansion of its restaurant portfolio, investments in digitalization and supply chain, as well as “food innovation” and value proposition. It will also use a portion to boost working capital and for general corporate purposes.
Yum China’s share sale would become the third-largest secondary listing in Hong Kong this year. It would trail two Chinese internet giants: NetEase, Inc. (Nasdaq: NTES; HKEX: 09999) raised $2.7 billion, followed in July by the online retail titan JD.com, Inc. (Nasdaq: JD; HKEX: 09618) bringing in $3.9 billion.
That same month, China Bohai Bank Co., Ltd. (HKEX: 09668) completed the largest primary listing this year, raising $2.05 billion.
As trade tensions between Beijing and Washington have heated up, more U.S.-listed firms have been looking to bring their listings closer to home. Washington has threatened to delist Chinese firms from their bourses if they do not comply with its auditing standards by 2022.
Meanwhile, Yum China could have a problem of its own: Chain Reaction Research (CRR), a provider of sustainability risk analysis, published a 17-page report in July alleging Yum China has a "sizeable deforestation footprint" and faces related financial risks that may raise red flags for both ESG regulators and investors.
As Covid-19 has taken a toll on Yum’s sales, it posted revenues of $1.90 billion in the second quarter, down 10% compared with the same period in 2019. Net income declined 23% to $136 million, or 34 cents per share. According to Yum China, it operates 10,000 restaurants in more than 14 cities.
In early trading Friday in New York, Yum China’s stock slipped 4% from Thursday’s close to $53.56 per American depositary share.
The fast-food giant is scheduled to begin trading in Hong Kong under the stock code “09987” on September 10.