Rare Chinese Trust Listing Seeks to Overcome Finance IPO Curse

As Shandong International Trust Co. markets its Hong Kong initial public offering this week, a sobering statistic looms in the background: most listings from the Chinese finance industry lose investors money. 

The company, which is seeking to sell $450 million of stock with existing shareholders, would be the first Chinese trust company to list in over two decades. Proceeds will go toward turning Shandong International into something of a financial supermarket, allowing it to buy stakes in commercial banks, brokerages and asset managers, its prospectus shows.

Shandong International will join Chinese financial firms that have completed $43 billion of first-time share sales in Hong Kong over the past three years. Those companies have fallen an average 4.9 percent from their offer prices, data compiled by Bloomberg show. Other sectors perform much better, with the average Hong Kong listing during that period posting a 6.7 percent gain to date, according to the Bloomberg figures, which are weighted by deal size.

Despite the losses, Chinese financial companies continue to dominate the Hong Kong IPO market, with more than half of fundraising over the past three years coming from the industry. The poor performance of mainland banks and brokerages shows why investors have been flocking to tech offerings in the city.

Shandong International expects to price its offering Friday in Hong Kong and begin trading on Dec. 8, according to the deal terms. CCB International Capital Ltd., Bocom International (Asia) Ltd. and Haitong International Capital Ltd. are joint sponsors of the offering.

— With assistance by Crystal Tse

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