Date
24 March 2017
An initial public offering would require Shandong International Trust to meet the Hong Kong exchange’s disclosure requirements. Photo: Bloomberg
An initial public offering would require Shandong International Trust to meet the Hong Kong exchange’s disclosure requirements. Photo: Bloomberg

Shandong IPO brings Chinese trust firms out of the shadows

Shandong International Trust Co. Ltd., one of China’s 68 trust firms whose operations and assets have been largely unknown to outsiders, is seeking to raise US$500 million in an initial public offering in Hong Kong, the Wall Street Journal reported, citing people with knowledge of the matter.

The listing, which is expected to be completed as early as the third quarter of this year, could shed light on one of the darkest corners of the country’s “shadow banking” system, the newspaper said.  

Shandong International would be the first Chinese trust company to list outside the mainland, and the first to go public in more than two decades.

Two other trust companies—Shenzhen-listed Shaanxi International Trust Co. Ltd. (000563.CN) and Shanghai-listed Anxin Trust Co. Ltd. (600816.CN)—were floated in 1994.

Shandong International, established in 1987, is involved in various financial businesses including offering real-estate trust products and family trustee services.

An IPO would require the firm to meet the Hong Kong exchange’s disclosure requirements.

According to its 2014 annual report, the company had 330 billion yuan (US$50.1 billion) in assets under trust management at the end of that year, around half of which were loans, and profit of 766 million yuan on 1.5 billion yuan in revenue.

Trust companies form part of China’s shadow banking system, which includes non-bank financial firms such as internet finance companies, pawnshops and leasing firms.

These institutions lend money and make investments but they have less obligation to disclose the health of their operations or the composition of their assets than banks, the Journal said.

Shadow-banking companies had assets of around 45 trillion yuan (US$6.8 trillion) as of the first half of last year, Moody’s Investors Service said. That’s about two-thirds of China’s gross domestic product.

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