China's Huatai, Bluestar Weigh London Share Sales

(Bloomberg) -- Huatai Securities Co., China’s third-largest brokerage by market value, and Bluestar Adisseo Co. are among Chinese companies considering U.K. listings as authorities prepare a trading link between the two countries, people familiar with the matter said.

Huatai, which has a market capitalization of about $16 billion, has asked investment banks to pitch for a role on a potential sale of global depositary receipts in London, according to the people. It is considering selling GDRs as soon as this year, the people said, asking not to be identified because the information is private.

The company could seek to raise the equivalent of at least several hundred million dollars, though a precise size hasn’t been decided, two of the people said. Any deal would be complicated by the fact that the company’s stock is already available to international investors in Hong Kong, where it trades at a discount to its Shanghai-listed shares, the people said.

Talks about listing GDRs in London come as authorities in the U.K. and China move closer to starting what’s known the London-Shanghai link, a system that will see companies from each country list shares in the other nation’s stock market. While Chinese policy makers have said the aim is to start the program this year, no firms have announced their participation.

Bluestar Adisseo, a Chinese animal-nutrition firm, is separately weighing a GDR offering in London that could raise about $500 million, the people said. The company, controlled by state-owned China National Chemical Corp., is discussing the possibility with potential advisers, according to the people.

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No final decisions have been made, and there’s no certainty the deliberations will lead to any deals, the people said. The precise structure of the offerings remains unclear, and they could be delayed due to the novelty of the transactions, the people said.

Foreign companies have raised $4.7 billion in U.K. equity offerings this year, down from $11.6 billion during the same period in 2017, data compiled by Bloomberg show. A representative for Huatai didn’t immediately respond to a request for comment, while a representative for Bluestar declined to comment.

Chinese authorities have been preparing a trading link with the U.K. as part of a broader effort to increase access to the country’s financial system. In the works since at least September 2015, the program will give offshore investors the chance to buy Chinese companies on the London Stock Exchange.

Companies that are worth at least 20 billion yuan ($2.9 billion) and already on the Shanghai Stock Exchange can apply to list on a newly-created trading venue in London, according to an LSE presentation from May.

--With assistance from Benjamin Robertson.

To contact Bloomberg News staff for this story: Crystal Tse in Hong Kong at ctse44@bloomberg.net;Manuel Baigorri in Hong Kong at mbaigorri@bloomberg.net;Vinicy Chan in Hong Kong at vchan91@bloomberg.net;Jun Luo in Shanghai at jluo6@bloomberg.net

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, ;Sam Mamudi at smamudi@bloomberg.net, Russell Ward

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