State-owned bad debt management firm China Huarong Asset Management Co Ltd has won approval from Hong Kong's stock exchange for its initial public offering, expected to raise as much as $3 billion, a person with direct knowledge of the plans said.

Due to volatility in global stock markets, the company will wait a couple of weeks before marketing the IPO, instead of beginning right away, the source said, setting the stage for an offering in September or early October.

The source, who was not authorized to talk to media on the matter, declined to be identified. A Beijing-based spokeswoman for Huarong declined to comment.

The company will become the second of China's four biggest bad debt managers to list after China Cinda Asset Management Co Ltd raised $2.8 billion in Hong Kong in December 2013.

It has yet to disclose terms of the IPO.

Although Cinda saw a 26 percent pop in its trading debut, its shares have languished in recent weeks as investors shunned Chinese financial services firms on concerns about a slowdown in the country's economy. Cinda's stock has tumbled 43 percent from this year's peak in May and is now trading below its IPO price.

Bad debt management firms such as Huarong and Cinda make money by buying soured loans from banks and other companies and then attempting to earn money by restructuring the debt or recovering cash from the borrowers.