(Bloomberg) -- 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.
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.
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.
--With assistance from Shawna Kwan.
©2024 Bloomberg L.P.
