China’s Shandong International Trust makes history, raising up to US$450m in Hong Kong IPO

Shandong International Trust on Monday became the first trust from China to launch an initial public offering in Hong Kong of 647 million shares to raise as much as HK$3.51 billion (US$450 million).

The stock, which is being offered at an indicated price range of HK$4.46 to HK$5.43 per share, is expected to start trading on December 8 after the company failed in its first attempt to list in Hong Kong earlier this year. SIT also becomes the first Chinese trust since 1994 to list after Shaanxi International Trust and Anxin Trust.

Analysts said a Hong Kong IPO has become a relatively better choice for trust firms, as mainland regulators view direct A-share listing plans with caution. Authorities on the mainland have tightened financial scrutiny and reining in the vast shadow banking industry, at the heart of which is trust companies.

SIT, backed by Shandong’s provincial government, was ranked No 25 among China’s 68 trust firms with 255 billion yuan (US$38.6 billion) in assets in 2016, according to the company.

Although SIT declined to elaborate why it failed to list in its previous attempt, analysts said the firm’s original plan may have been affected for a slew of reasons, including its holdings in Century Plaza Hotel, the first company forced to delist from the Shenzhen market in 2017, a regulatory warning for allegedly assisting local governments in “irregular debt financing”as well as a fine for failing to make a timely disclosure of information to trust beneficiaries.