One of China’s leading producers of aluminium and vinyl is planning to list in Hong Kong within three months, in a sign that mainland companies hope to tap the capital markets to fund growth plans.

 

People familiar with the matter said that Zhong Wang Group plans to raise at least $500m to fund capital expansion.

 

The company, based in the north-eastern province of Liaoning, has hired Citic Securities, UBS and JPMorgan to assist with a possible listing.

 

All of the banks declined to comment.

 

However, one observer said the company had yet to receive clearance from the Hong Kong exchange’s listing committee.

 

“Zhong Wang hopes to schedule a hearing sometime early next month,” said one person familiar with the situation. “Whether the listing goes ahead depends on regulatory clearance and, of course, on the state of the markets.”

 

The mere sign that a mainland company is considering a chunky initial public offering will cheer executives at the Hong Kong and Shanghai stock markets, which have experienced a dearth in new issuance in recent months.

 

Renhe Commercial, a Chinese shopping mall operator, raised $437m in October, the last significant listing in Hong Kong.

 

Privately-owned Zhong Wang is a supplier of aluminium products to the locomotive industry. It is set to benefit from central government’s fiscal stimulus plan.

 

Analysts expect IPO activity to remain sluggish for at least the first half of the year, but said that companies could probably “test the market” later in the year.

 

Listings activity in Hong Kong, Shanghai and Shenzhen slowed significantly in the second half of last year.

 

A PwC report forecast this month that new listings in Hong Kong would raise HK$70bn ($9bn) this year, slightly more than last year’s HK$65.8bn.