Lacklustre public interest makes Shandong Trust IPO one of the year’s coolest in Hong Kong

The trust’s IPO barely makes it past the oversubscription mark

PUBLISHED : Thursday, 07 December, 2017, 3:41pm
UPDATED : Thursday, 07 December, 2017, 11:09pm

Shandong International Trust, the first Chinese trust to seek a listing in Hong Kong, has priced its initial public offering close to the bottom end of range to raise HK$2.95 billion (US$378 million), after receiving one of the coolest responses for a major IPO this year.

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SIT, also the first Chinese trust in 23 years to go public after Shaanxi International Trust and Anxin Trust, will start trading on Hong Kong’s main board on Friday after pricing its IPO at HK$4.56 per share, near the lower end of an expected range of HK$4.46 to HK$5.43, the company said on Thursday.

The fundraising value puts SIT’s IPO as the 12th largest in Hong Kong this year.

The public tranche, which provides 10 per cent of the shares in its global offering to Hong Kong’s retail investors, received an investor demand of 68.5 million shares, reflecting an oversubscription of 0.06 time.

That means almost every retail investor who had subscribed for the new shares will get the full allotment.

Still, that is in contrast to recent listings, which were heavily oversubscribed.

SIT’s international placement tranche, which mainly targets institutional investors, also received just about enough subscription, according to the company.

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Five cornerstone investors – Jinan Finance Group, ICBC Asset Management Scheme Nominee, Shandong Development and Investment Holding Group, China Merchants Bank Asset Management, and Shandong Guohui Investment – have subscribed to 305 million shares, about 47.2 per cent of the company’s shares issued after the IPO.

SIT said it plans to use the proceeds to form subsidiaries in property investment and wealth management, and to acquire interests in financial companies and asset managers in China.

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.

Government-owned Shandong Lucion Investment Holdings controls a 69.27 per cent stake in SIT. CNPC Asset Management, an arm of China National Petroleum Corporation, owns 25 per cent.

For the first five months of 2017, SIT said its net profit increased 41 per cent year on year to 400 million yuan.

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A number of companies have kicked off their IPOs since the end of November, including Japanese instant noodle giant Nissin Foods, Chinese construction contractor Hebei Construction Group, online education service provider China Education Group, and Chinese mobile game developer Game Hollywood.

Nissin Foods will debut on Monday on the main board.