Bloomberg has stated that Guizhou Guotai Liquor Group is gearing up to list its shares on the Hong Kong stock market in an initial public offering that could raise more than $500 million.

Zhen Jiu, a rival baijiu brand, is also considering raising as much as $400 million through a Hong Kong listing.

Both are at an early stage in the process and the details could change.

Alcohol producers are now banned from IPOs on China’s domestic stock exchanges as the country reforms its listing system, depriving them of potentially higher valuations onshore. They are, however, able to float shares in Hong Kong, despite the former colony having reverted to Beijing’s control in 1997.

Guotai filed for a possible IPO in Shanghai in 2020, according to a preliminary document, while the two biggest baijiu producers, Kweichow Moutai Co. and Wuliangye Yibin, were listed on the Shanghai market before the regulations were changed.

In the first 10 days of this year, global investors sunk almost US$2 billion into baijiu group Wulianye Yibin and only a marginally smaller amount into Kweichow Moutai, whose shares have put on nearly 6% since 1st January.

Their shares can also be bought via Hong Kong, where they have soared over the past few years as investors seek to cash in on the high margins available in the Chinese market.

Guotai, founded in 1999, sells high-end baijiu for as much as 2,999 yuan ($442) a bottle, according to its website. In 2021, its sales (including tax) exceeded 10 billion yuan.

The news follows on from In the first 10 days of this year, global investors sank almost US$2 billion into

Earlier this month, the drinks business reported that a domestic surplus of baijiu, built up during the pandemic, could force prices down as retailers and produces move to shift stock. Some say that the baijiu industry has unopened stock worth more than US$40 billion, equivalent to half the total retail sales of baijiu in 2021.

Locally-produced baijius take 95% of the national beverage alcohol market.