China’s Sinochem Energy files for $2b Hong Kong listing

Photo: Reuters

Sinochem Energy, a unit of China’s state-owned Sinochem Group, has filed for a Hong Kong initial public offering (IPO) of about $2 billion, as the group seeks to raise capital amid a shift to higher-value businesses, including petrochemicals production.

Sinochem Energy operates the group’s oil and petroleum products trading, oil refining, storage and logistics, as well as distribution and retail businesses, but not its struggling upstream business that includes overseas oil and gas production.

Reuters reported in April that the group had hired seven banks for the listing of its key oil assets that was expected to raise about $2 billion.

The proposed float comes amid a push by Beijing to inject new life into bloated state-owned enterprises by encouraging private capital investment in such enterprises.

China Tower, the world’s largest telecoms tower operator, is raising up to $8.7 billion in its Hong Kong listing. The state-owned firm has secured $1.4billion from 10 cornerstone investors.

Beijing is also looking to create bigger, stronger state firms, and build globally competitive enterprises.

For example, Sinochem is set to merge with state-owned ChemChina, which in 2016 agreed to buy Swiss pesticides and seeds group Syngenta for $43 billion.

The Sinochem-ChemChina deal will create the world’s biggest industrial chemicals firm worth around $120 billion, to be led by Sinochem Chairman Frank Ning.

Sinochem Energy‘s IPO plans have been pushed ahead by Ning, who joined its parent group in early 2016 from food group COFCO, where he was well known for aggressive restructuring and M&A.

Under his leadership, several Sinochem units have been given more leeway in their expansion plans and more support for tapping capital markets for fundraising.

Hit by low oil prices, Beijing-based Sinochem Group has aimed to shift from exploration and production to the more value-added refining and retailing businesses. It has been looking to sell a stake in Brazil’s Peregrino offshore oilfield.

Benchmark Brent crude is current trading under $75 per barrel, up 11 percent so far this year but significantly below an all-time high near $150 hit in 2008.

Sinochem Energy operates the 240,000 barrel-per-day Quanzhou refinery in the coastal province of Fujian, a major source of group profits in the past two years.

The group has said it wants to boost investment at the refinery to diversify into petrochemicals.

Sinochem Energy‘s revenue in 2017 rose 50 percent to 392 billion yuan ($57.44 billion) while profit increased 24 percent to 5.23 billion yuan, the IPO prospectus showed.

BOC International, CLSA and Morgan Stanley <MS.N> are the joint sponsors for Sinochem Energy‘s float.

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Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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