NYSE-listed Chinese delivery firm ZTO Express to raise up to $1.6 billion in HK secondary listing

17-Sep-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Delivery firm ZTO Express (Cayman) said on Wednesday it expects to raise up to HK$12.1 billion (US$1.6 billion) in a secondary listing in Hong Kong this month, becoming the latest in a flurry of US-listed Chinese companies seeking to raise funds in the city as tensions mount between Washington and Beijing, according to a US regulatory filing.

ZTO Express plans to sell 45 million shares, including 2.25 million shares to retail investors in Hong Kong, representing about 5 per cent of its global offering, according to a prospectus filed with the US Securities and Exchange Commission in the early hours of Wednesday. There is an option to sell up to 6.75 million additional shares as part of an overallotment.

The offering has a maximum price of HK$268 a share, which represents a 10 per cent premium on the company’s closing price of $31.37 a share in New York on Tuesday. The New York Stock Exchange-listed company plans to price its secondary listing on September 22, with trading in Hong Kong to begin on September 29. Its shares will trade under the symbol 2057.

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The move by ZTO Express to list closer to its home market is the latest by a Chinese company that originally went public in the United States, and follows secondary listings in Hong Kong this year by technology companies JD.com and NetEase, and Yum China, the mainland Chinese operator of KFC and Pizza Hut restaurants. Combined, these firms have raised about $10 billion this year.

In November 2019, Alibaba Group Holding raised $12.9 billion in a secondary listing in Hong Kong, following rule changes that made it easier for technology companies and pre-revenue biotechnology companies to list in the city. Alibaba is the parent company of the South China Morning Post.

The ZTO Express share sale comes amid a busy week for fundraising in Hong Kong. Shanghai-based hotel chain operator Huazhu Group is expected to price its offering on Wednesday after saying last week that it plans to raise up to $970 million in a secondary listing in the city. At the same time, Shenzhen-based property technology company Ming Yuan Cloud is seeking to raise up to $797 million in an initial public offering (IPO), which is expected to close on Friday.

The new listings in Hong Kong come as relations have worsened this year between the US and China. A group of top US regulators recommended in August that Chinese companies and other foreign issuers who fail to provide access to their audit working papers for oversight be delisted from American bourses by January 2022. The US State Department also asked American colleges and universities to divest their holdings in Chinese companies, warning of the potential for “wholesale delisting”.

The Hong Kong stock exchange has benefited from the disruption, attracting a number of high-profile listings, including the dual IPO of Ant Group, the operator of Alipay and an affiliate of Alibaba.

ZTO Express, in which Alibaba owns an 8.7 per cent stake, said it plans to use the proceeds of the share sale to further develop its infrastructure and capacity, to strengthen its network and to invest in its logistics ecosystem. Based in Shanghai, the company said its delivery network covers 99.2 per cent of cities and counties across China.

For the six months ended June 30, it said its profit dropped 10.9 per cent to 1.82 billion yuan (US$258.25 million) from 2 billion yuan in the first half of 2019. For full year of 2019, the company reported a profit of 5.67 billion yuan, up 29 per cent from 4.39 billion yuan in 2018.

Goldman Sachs is the sole sponsor and global coordinator of the deal, with CICC, Citigroup and UBS serving as joint bookrunners.



Category: Hong Kong

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