Hong Kong IPO Irregularities Surface As Corner Placements And Retail Losses Emerge, Haizhi Technology Implicated

On March 12, reports first revealed alleged collusion between mainland Chinese brokerages operating in Hong Kong and hedge funds to execute insider trading schemes that targeted retail investors. Subsequent enforcement actions included raids on the Hong Kong offices of CITIC Securities and Guotai Junan International, with the Independent Commission Against Corruption and the Securities and Futures Commission confirming searches at 14 locations and the arrest of eight individuals. Among those taken in for questioning was Samuel Pan, head of Guotai Junan’s equity markets division.

Investigators identified the hedge fund Infini Capital as a principal actor in the alleged insider trading, attributing approximately HKD 315 million in illicit gains to its activities and reporting that certain brokerage executives received bribes exceeding HKD 4 million. Infini Capital’s founder, Tony Chin, who previously worked at Morgan Stanley and HSBC, expanded trading operations into mainland China in 2011, entered offshore markets in 2015 and attracted external capital in 2023. Public filings and market data show that Infini Capital participated in placements for multiple H‑share offerings since 2025, including Black Sesame Intelligent, Paradigm Intelligence, Weimob Group, GCL Technology, SenseTime and China Ruyi.

Further developments indicate that Samuel Pan’s spouse, Shen Yin, a vice president in bond sales at DBS Bank’s fixed‑income division, has been suspended by the Hong Kong regulator. Data compiled by market observers show that both CITIC Securities and Guotai Junan were involved in placements for issuers such as SenseTime, UDrive Innovation, XtalPi Holdings, Yimai Sunshine, UBTech and Weimob Group.

Market participants warn that the probe, which centers on placement practices, could have broader implications for Hong Kong’s IPO market given the number of offerings sponsored by the implicated brokerages and the extent of Infini Capital’s participation. An anonymous complaint alleging the existence of “guaranteed funds” tied to Hong Kong IPOs has circulated in Central, and observers note that the incidence of cornered placements has increased since the 2025 reform of the Hong Kong IPO mechanism.

Allegations describe a placement model in which a fund such as ZD Global Group provides substantial inducements to company executives and chairpersons to secure concentrated allocations. Under the reported arrangement, ZD Global would control supply and sell shares to retail investors who agreed to surrender 70% of their gains to the placement organizer while retaining 30% for themselves. Executives and placement organizers would capture the largest share of proceeds, leaving ordinary retail investors who purchase in the secondary market exposed to subsequent sell‑offs.

Haizhi Technology has been cited as a case study consistent with this pattern. Listed on February 26, Haizhi’s shares surged 242% on the first trading day and rose nearly 500% within three days before a rapid decline that left the price roughly half its peak. Founded in Beijing in 2013 and positioned as a provider of AI solutions addressing model “hallucinations,” Haizhi reported revenues of RMB 313 million in 2022, RMB 376 million in 2023 and RMB 503 million in 2024, with RMB 249 million recorded in the first three quarters of 2025, a year‑on‑year increase of 17.45%. Gross margins have remained below 40%, and the company has continued to report losses: RMB 176 million in 2022, RMB 266 million in 2023 and RMB 94 million in 2024, before losses widened to RMB 211 million in the first three quarters of 2025. High marketing and administrative expenses have outpaced research‑and‑development spending.

Despite persistent losses, Haizhi attracted prominent pre‑IPO investors. According to the prospectus, Legend Capital (affiliated with Lenovo) held 12.68%, Sky Fin (an IDG Capital vehicle) held 4.52% and Hillhouse held 3.45%, alongside Beijing state capital, international investors and third‑party funds. Hillhouse’s investments across multiple rounds imply a cost basis that, by public estimates, was discounted by between 63% and 85% relative to the IPO price, producing substantial paper gains. Infini Capital also appeared among cornerstone investors, subscribing USD 3 million for approximately 0.22% of the company and realizing a reported unrealized gain of about USD 6.27 million.

Observers note that Haizhi’s IPO structure aligned with the alleged cornered‑placement mechanics: the public offering was reportedly oversubscribed by more than 5,000 times, only 10% of shares were allocated to the public and no clawback mechanism was in place, concentrating supply among institutional participants. Extremely low allocation rates in both tranches created a scarcity of freely tradable shares, facilitating aggressive post‑listing price support followed by rapid sell‑downs that transferred losses to retail investors.