China urges its firms to list in London in renewed global push

LONDON • China is urging domestic companies to look at listing in London, several sources told Reuters, as the country aims to revive deals under a Stock Connect scheme and strengthen overseas ties in the wake of the coronavirus crisis.

The Shanghai-London Stock Connect scheme, which began operating last year, aims to build links between Britain and China, help Chinese companies expand their investor base and give mainland investors access to UK-listed companies.

The original plan was for several companies to take part in the scheme in the first couple of years but so far, only one company, Huatai Securities, made the trip from Shanghai to London last June.

The Chinese authorities have now given the go-ahead for China Pacific Insurance and SDIC Power to move ahead with their London listing plans, the sources said, after both deals were halted last year.

They also gave the nod to China Yangtze Power to begin preparations for a secondary listing on the London Stock Exchange, the sources said, speaking on condition of anonymity as the matter is confidential.

In a statement to Reuters after publication of the report, the Shanghai Stock Exchange said it had been continually promoting the Shanghai-London Stock Connect scheme that benefits both companies and investors.

It added that offshore listings under the scheme were "companies' own decisions based on their development needs and market conditions", while the timing of a London listing by SDIC or China Pacific Insurance is also subject to approval from British regulators.

The China Securities Regulatory Commission and China Pacific Insurance did not respond to Reuters' requests for comment. SDIC Power and China Yangtze Power declined to comment. The London Stock Exchange also declined to comment.

Under the Stock Connect scheme, first announced in 2018, Chinese companies are allowed to add a secondary listing of Global Depositary Receipts in Britain that would be linked to shares in Shanghai.

The sources, including officials from banks, government and exchanges, said the aim was to push for a resumption of listings under the scheme as China seeks to improve ties with the outside world and help to fund its post-lockdown recovery.

"In the second half of this year, we could see one or maybe two Chinese companies list in London," said one of the sources, who is closely involved in the process.

In the London-Shanghai listings pipeline, China Pacific Insurance is likely to be the first Chinese company to make its London debut this year, seeking to raise between US$2 billion (S$2.8 billion) and US$3 billion, and could price the sale in September or October, said another source.

China Yangtze Power is another sizeable listing that could raise about US$2.5 billion from a deal equivalent to about 5 per cent of its share capital, the source added.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 20, 2020, with the headline 'China urges its firms to list in London in renewed global push'. Print Edition | Subscribe