The potential listing of Hong Kong-traded CK Infrastructure Holdings Ltd. in London is seen as a strategic move to access a larger pool of investors and facilitate overseas acquisitions.
CKI, one of the flagship companies backed by Hong Kong’s richest man Li Ka-shing, said on Thursday that it was considering a second listing in an overseas stock exchange such as London’s. The listing, if it happens, would not involve any fundraising, and a final decision has not been made, the company added.
A UK listing may raise CKI’s profile in the country and provide a currency hedge, according to Denise Wong, an industry analyst at Bloomberg Intelligence. “The move is likely to enhance its credibility and standing in overseas markets, positioning it well for a renewed M&A push,” Wong wrote in a note.
This consideration comes as the UK is trying to attract more companies to London following a drop in initial public offerings. New rules effective July 29 allow companies listed elsewhere, which aren’t incorporated in the UK, to list shares in London in a bespoke category.
Victor Li, CKI’s chairman and the elder Li’s son, has stressed that his firms are global conglomerates seeking deals worldwide, provided they offer attractive returns.
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CKI is the infrastructure arm of Li’s CK Group, with the UK being a key market. Last year, the country generated more profits for the company than Hong Kong and mainland China combined.
However, CKI’s prospective listing in London is not expected to trigger a wave of similar moves by other Hong Kong-listed companies, according to Andy Maynard, head of equities at investment bank China Renaissance Securities HK Ltd.
“I would be skeptical of other companies that don’t have a UK brand or a UK DNA,” he said.
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Hong Kong is also facing its own liquidity woes, with a sharp drop in IPO activity over the past three years and reluctance by foreign investors to pile back into Chinese equities. Last year, the city set up a task force to bolster stock-market liquidity and later lowered the stock-trade stamp duty to 0.10% from 0.13%.
For CKI, a dual-listing “could probably also help reshuffle the investor base and dilute its HK/China identity, which could ease hurdles to overseas M&As, especially in countries that are wary of China’s influence,” Wong said.
Chart: Bloomberg
