Pedestrians walk past Yum! Brands Shanghai, China
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Shares of Yum China began trading in Hong Kong on Thursday, but lost more than 4% in early trade.
Yum China, which operates fast food restaurants KFC, Taco Bell and Pizza Hut in China, raised $2.22 billion by selling 41.9 million shares at 412 Hong Kong dollars ($53.16) apiece in this secondary listing.
The company has been listed in New York since 2016.
Yum China’s Hong Kong debut comes after the secondary listings of gaming giant NetEase and e-commerce firm JD.com, which raised 21.09 billion Hong Kong dollars ($2.7 billion) and 30.05 billion Hong Kong dollars ($3.87 billion), respectively.
The string of mega offerings marks what has been a hot year for listings in Hong Kong. U.S.-listed Chinese companies have been flocking to the city for their secondary listings amid rising U.S.-China tensions. The U.S. Senate passed a bill in June that could essentially ban many Chinese companies from listing on American exchanges.
R.J. Hottovy, consumer equity research strategist at Morningstar, suggested the stock’s initial decline may indicate investors seeing issues with the company itself, rather than IPO fatigue.
“It’s clear that not everybody is on board with investing in that space right now … frankly there’s a lot of uncertainty with Covid,” he told CNBC on Thursday. “Are people going to dine out less.. are they going to embrace online grocery? … Demand is certainly the one I think that probably is the biggest concern.”
But on the whole, Hottovy pointed out that the company has had “some pretty impressive growth.”
“I think Yum China’s doing pretty well. I think there could be an opportunity. We do see these shares as slightly undervalued at this point,” he said.