FirstFT: AstraZeneca drafts plan to spin off China unit through Hong Kong listing

Today’s scoop is on AstraZeneca, which has become the latest western multinational to consider significant restructuring to manage geopolitical risk from US-China tensions.

The UK’s biggest listed company by market value has drawn up plans to break out its China business and list it separately in Hong Kong. It began discussing the idea with bankers several months ago, according to people familiar with the talks.

A separation might not ultimately take place, the same people cautioned. One of the people said listing the entity in Shanghai was also possible.

Under the plans, the Anglo-Swedish drugmaker would still retain control of the carved-off entity. The idea has been “on the table for a few years”, one adviser to AstraZeneca said, adding that it had been sidelined until recently amid a global downturn in biotech stocks.

A person briefed on AstraZeneca’s plans said listing a separated unit in either Hong Kong or Shanghai could insulate it politically from any moves by China to crack down on foreign companies by making it a more plausibly domestic Chinese business. It would also offer a separate source of capital.

Here’s what else I’m keeping tabs on today:

Five more top stories

1. Exclusive: Crypto.com deploys internal teams to trade tokens for profit, the latest sign of potential conflicts of interest in the digital assets industry. In most sectors, market making and proprietary trading are usually conducted by separate private companies, but the Singapore-based group, a top-10 crypto marketplace, operates both. Read the full story.

2. BlackRock and JPMorgan Chase are helping Ukraine set up a reconstruction bank to steer public seed capital into rebuilding projects that can attract hundreds of billions of dollars in private investment. The project remains in the planning stages and is not expected to fully launch until the end of hostilities with Russia.

3. Exclusive: The UK’s Financial Conduct Authority has restricted Odey Asset Management from moving cash and assets in a voluntary agreement with the hedge fund to ensure it can continue running normally after its founder Crispin Odey was ousted over allegations of sexual impropriety. Here are more details on the restrictions to be published today.

4. The UK’s first deep geothermal energy project in 37 years starts operating today. The well in Cornwall will reach almost 5km below the Earth’s surface to tap into water of temperatures up to 200C in order to heat nearby greenhouses and enclosed rainforest biomes. Despite the project’s high cost, here is why proponents of geothermal energy are hopeful.

5. SVB Financial Group has reached a deal to sell its investment banking division to a group led by some of its own top bankers, including Jeffrey Leerink and hedge fund the Baupost Group. The unit, known as SVB Securities, has been for sale since Silicon Valley Bank’s failure in March. Read more about the deal.

The Big Read

Xi Jinping has swiftly advanced a new group of political leaders with a shared background: deep experience in China’s military-industrial complex. Their rise to the top echelons of power is part of the president’s efforts to reinvigorate the country’s long-running project of “military-civil fusion”, which seeks to harness new technologies from the private sector for the benefit of the country’s rapidly modernising military.

We’re also reading . . . 

Chart of the day

Assets invested in global exchange traded funds have hit a record of $10.32tn off the back of rallying stock markets and resilient inflows, exceeding a peak at the end of 2021 before Russia’s invasion of Ukraine and a global surge in inflation.

Take a break from the news

Vogue Ukraine has become an unlikely voice of defiance since the Russian invasion. “There is no textbook on how to run a magazine, let alone a fashion title, during the war,” editor-in-chief Venya Brykalin told Jo Ellison.

Additional contributions by Benjamin Wilhelm and Gordon Smith