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

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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 US$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 US$10 billion this year.

In November 2019, Alibaba Group Holding raised US$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 priced its secondary listing at HK$297 a share on Wednesday, raising about US$782 million, according to a person familiar with the matter. That represents a 2 per cent discount to its closing price in New York on Tuesday.

At the same time, Shenzhen-based property technology company Ming Yuan Cloud is seeking to raise up to US$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.

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

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.