(Updates with comments from investment strategist in fourth paragraph.)
June 1 (Bloomberg) -- Coca-Cola Co., the world’s largest soft-drink maker, is in talks with China’s government to list shares in Shanghai as the company accelerates expansion in the world’s most populous nation.
“We are interested in exploring the opportunity of listing our stock on the Shanghai Stock Exchange,” Geoff Walsh, Coca-Cola’s Hong Kong-based public affairs and communications director for Asia, said in an e-mailed reply to queries. “We continue to have positive discussions with Chinese government officials as we look at this opportunity.”
Coca-Cola, whose Sprite is China’s top-selling soft drink, will probably raise spending in the country as it invests a planned $2 billion faster than expected, Chief Executive Officer Muhtar Kent said in November. China has the world’s third-biggest stock market, and companies including HSBC Holdings Plc are seeking permission to list on its bourses to raise funds in the Chinese currency.
“This would be attractive for Chinese domestic investors as it would give them more diversity in the type of companies they can invest in,” said Arjuna Mahendran, Singapore-based head of investment strategy for Asia at HSBC Private Bank, overseeing $460 billion globally. “It also makes a lot of sense for Coca-Cola as it gives them access to international activities to fund their Chinese expansion and allows them to raise funds in yuan.”
About 14 percent of Coca-Cola’s $35 billion in sales last year were made in the Pacific region, according to data compiled by Bloomberg. The maker of Minute Maid juice is building plants in China at a faster pace than it expected as it jostles for market share with rivals including PepsiCo Inc.
“We’ve been ahead on that commitment” to invest $2 billion in China from 2009 to 2011, Walsh said in a phone interview today. He declined to comment further on any plans to sell shares in Shanghai.
While overseas companies can sell stock in Hong Kong, they’re barred from doing so in mainland China. The government may approve a board for overseas companies on the mainland by the end of June and the first listing may occur as soon as October, Caixin Century magazine reported May 30, citing an unidentified investment banker.
Mainland China doesn’t include Hong Kong, Macau or Taiwan.
HSBC, Europe’s largest bank by market value, aims to raise a “significant amount” through a Shanghai listing, Michael Geoghegan, chief executive officer at the time, said last year.
London Stock Exchange Group Plc wants to list in Shanghai by the end of 2011, Chief Executive Officer Xavier Rolet said last year.
“Most of the impact from a Coca-Cola listing will be in terms of improving its brand in China,” Charles Yan, Hong Kong-based greater China consumer analyst for Yuanta Securities Co., said in a phone interview today. “In China, if you’re a public firm, it helps your brand. It’s also much easier to get a loan from local banks, and some local governments treat listed companies better.”
China controls capital flows and only allows citizens to buy overseas-listed shares through institutions under its Qualified Domestic Institutional Investors program.
China’s yuan rose 0.02 percent to 6.4780 per dollar, earlier touching a 17-year high of 6.4777. Twelve-month non- deliverable forwards gained 0.05 percent to 6.3575, a 1.9 percent premium to the onshore spot rate.
China’s stock market had a combined market value of $3.7 trillion for the Shanghai and Shenzhen bourses as of yesterday, according to data compiled by Bloomberg. The U.S. is the largest with a market value of $16.6 trillion, while Japan is ranked No. 2.
--Frank Longid and Allen Wan. With assistance from Fox Hu in Hong Kong. Editors: Nicholas Wadhams, Mohammed Hadi
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