One of China’s leading “bad banks” is expected to offer its $2.5bn Hong Kong float this week with a record amount locked up by so-called cornerstone backers, suggesting shaky investor sentiment that bodes ill for future new listings in the city.
China Huarong Asset Managementis likely to allot more than 70 per cent of its listing to cornerstones, according to a person with knowledge of the deal. Cornerstone investors get the full allocation they request in return for accepting a lock-up period, typically six months.
While the practice was initially used to lure prospective investors by attaching marquee names to a deal, more recently cornerstones have helped lower the risk of an unfilled order book.
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