COSCO Shipping Holdings Co., China’s largest shipping group, is considering raising capital for the first time on the London Stock Exchange (LSE) through a new initiative with Shanghai’s bourse, two finance sources familiar with the matter said.

The Shanghai-London stock connect program will enable Chinese companies to raise fresh money on the LSE through issuing global depository receipts (GDR), which could boost momentum amid concerns that Brexit could dent the City of London’s leading position in financial markets.

The LSE is hoping to get a boost from China as the world’s fastest growing capital market.

The sources said COSCO Shipping, which is listed in Shanghai and Hong Kong, was examining the possibility of issuing GDRs in London. No decision had been taken yet, partly as it would also require Chinese regulatory approval.

“Any capital raising would be large to make it worthwhile and also to bolster connections with foreign investors,” one of the sources said.

The second source added: “For political reasons as well, London would be a preferable capital destination for COSCO rather than New York, for instance.”

COSCO, which has an estimated market capitalization in Shanghai of US$5.5 billion, did not respond to requests for comment.

Developing a tie-up between Shanghai and London is the latest in a series of efforts by China to gradually bring its vast stock markets into the world trading system.

COSCO, which is the world’s No. 3 container shipping line, is still contending with pressured markets and has been looking at expanding its activities globally.

Earlier this year, it completed its US$6.3 billion acquisition of Hong Kong’s Orient Overseas International Ltd., helping to strengthen its leading position in global shipping and also as China’s top sea transportation arm.

COSCO group acquired a 51 percent stake in Greece’s Piraeus port in 2016 and finance sources say the company has looked at other shipping assets in Europe since then.

One of the finance sources said Britain’s shipping minister Nusrat Ghani had held meetings with COSCO officials as part of efforts to boost trade between Britain and China.

A British official said Ghani met with a number of companies and partners during a visit to China earlier this year, declining further comment.

Martina Garcia, head of emerging markets strategy at the London Stock Exchange, declined to comment when asked about a possible COSCO float, but added that the LSE had spoken with about 70 Chinese companies since May.

“We expect a good pipeline in 2019, diversified across sectors,” Garcia said. “It is going to take time. The idea is to have a slow build up.”

“What we are speaking about is an international investor pool which is not just Europe or U.K. oriented,” she said.

Under the rules, companies listed in the two cities can apply for flotation on each other’s exchanges through the issuance of depository receipts.

London-listed firms can initially only issue Chinese Depository Receipts (CDR) backed by existing shares, meaning they cannot raise funds through Shanghai listings.

When asked how much could be raised through the GDR program, Garcia said “the Chinese regulator has viewed an envelope of 300 billion yuan (US$43.6 billion).”

Sources said last week that the launch of the stock connect program would be delayed by at least one month, partly due to a lack of clarity from Chinese regulators over key technical issues.

Huatai Securities became the first Chinese firm to win approval from China’s securities watchdog to sell shares in London. (SD-Agencies)