PAG said to plan $10b merger, offshore IPO of Chinese gas assets

PAG group chairman and CEO Weijian Shan. Photo: PAG

Private equity firm PAG plans to merge its two Chinese industrial gases portfolio companies and seek an offshore listing for the combined entity estimated to be worth more than $10 billion, two people with knowledge of the matter said.

Hong Kong-based PAG is discussing with banks a plan to combine Yingde Gases Group with Shanghai Baosteel Gases Group, both Shanghai-headquartered, and then list the merged entity in what could be a billion dollar float, they told Reuters.

It would mark the biggest exit so far for PAG, which is led by seasoned Chinese dealmaker Weijian Shan and manages $40 billion in assets worldwide.

A company with a $10 billion or more valuation would typically sell 10%-15% of its shares in an initial public offering, meaning it could raise at least $1 billion in a float. That would make it China’s largest offshore listing this year by a traditional sector company, according to Refinitiv data.

PAG is aiming to list the combined company this year but has not decided on the listing venue yet, said the people, adding that Hong Kong is the most likely place.

PAG declined to comment. Yingde did not immediately respond to a request for comment while Baosteel Gases could not immediately be reached.

The people declined to be identified as the information is confidential.

PAG won a bid in 2017 to buy out the then Hong Kong-listed Yingde Gases, China’s largest independent producer of industrial gases, after a rare public Chinese boardroom battle that pitted one of Yingde’s co-founders against two other co-founders.

The firm has since doubled its earnings before interest, taxes, depreciation, and amortization (EBITDA) to around $600 million, one of the sources said.

Fitch Ratings said in a December report the impact of COVID-19 on Yingde’s financials was limited and that it expected the company to perform solidly in 2020 and 2021.

In 2018, PAG won an auction for a 51% stake in Baosteel Gases from state-owned Baowu Steel. The private equity firm now owns 65% of Baosteel Gases, said a separate person with direct knowledge.

PAG appointed the same person as chief executive officer for both companies last year. The combined EBITDA of the two is about $1 billion, said the third source.

The private equity firm raised $6 billion in its third pan-Asia fund in 2018 and $3.6 billion in its second fund in 2016. Capital invested in Yingde came from the second fund while that in Baosteel Gases came from both funds, PAG’s website (www.pag.com) showed.

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. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.