Hong Kong Airlines, the regional airline owned by mainland carrier Hainan Airlines, plans to launch a $500 mn IPO that would be the first ever to raise proceeds in both Hong Kong dollars and yuan, according to media reports.
The offering, which could come in the fourth quarter, would follow a ‘dual tranche, dual counter’ model ‒ as outlined by the Hong Kong Stock Exchange in IPO guidelines issued in 2011 ‒ that would create two sets of shares, one in yuan and one in dollars, that carry the same rights, the South China Morning Post reports, citing ‘people involved in the deal’.
If it goes ahead, Hong Kong Airlines would become the first company to take advantage of the model, boosting the region’s campaign to increase international investment via the yuan and internationalize the currency.
The Wall Street Journal reports that the company, which has 23 aircraft flying short-haul routes from Hong Kong to the Chinese mainland and other cities in Asia, hasn’t yet made a final decision regarding the listing and has yet to submit its listing application to the exchange for the IPO.
Chinese pork producer WH Group, which bought US-based Smithfield Foods last year, was considering a dual-currency IPO early this year but decided against it, the WSJ adds, also citing ‘people familiar with the situation’.
While the Hong Kong Airlines IPO would be the first offering in both yuan and HK dollars, it would be the second to trade in yuan: Hui Xian REIT raised $1.6 bn in an IPO in 2011 with an offering in yuan.
The recent weakening of the yuan, which has fallen about 2.5 percent against the US dollar so far this year, makes offerings in yuan less attractive than they would have been in recent years when the Chinese currency was strengthening, the WSJ says.
