Zheshang Bank Draws Shenwan Hongyuan to Up to $1.75 Billion IPO

China Zheshang Bank Co., a commercial lender in eastern China, and an existing investor are seeking as much as $1.75 billion from a Hong Kong initial public offering.

The Hangzhou-based bank and China’s National Social Security Fund are offering 3.3 billion shares at HK$3.92 to HK$4.12 apiece, according to terms for the deal obtained by Bloomberg. Five cornerstone investors, including brokerage Shenwan Hongyuan Group Co. and Alibaba Group Ltd.’s finance affiliate, agreed to buy as much as $1.01 billion of stock, the terms show.

Zheshang Bank’s share sale would be the first Hong Kong IPO in 2016 to raise more than $300 million, as the city’s new listings experience the slowest start to a year since 2011, according to data compiled by Bloomberg. The lender is selling shares after Hong Kong’s index of mainland Chinese companies rebounded from a roughly seven-year low hit last month.

Zhejiang Seaport Group agreed to buy 1 billion IPO shares, worth as much as $532 million, while Lingyan Fund committed to purchase 250 million shares as a cornerstone investor, according to the terms. Shenwan Hongyuan will invest $100 million, while Zhejiang Ant Small & Micro Financial Services Group Co., controlled by Alibaba’s billionaire chairman Jack Ma, will buy $30 million of stock.

The offering will add to the $861 million of first-time share sales in the city this year, data compiled by Bloomberg show. Citic CLSA Capital Markets Ltd., China International Capital Corp., Goldman Sachs Group Inc. and ABC International Holdings Ltd. are joint sponsors of the IPO, according to a March 8 pre-listing filing.

Zheshang Bank plans to price the offering March 21 and begin trading March 30, the terms show. The lender had total assets of 1 trillion yuan ($153.9 billion) at Sept. 30, up 50 percent from the end of 2014, the pre-listing documents show.

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