China’s Sinochem Energy lets $2b HK IPO application lapse

The flag of Hong Kong Exchanges & Clearing Ltd. (HKEx), top center, the Chinese national flag, bottom center, and the Hong Kong SAR flag, bottom right, fly in the Central district of Hong Kong, China, on Wednesday, March 2, 2016. Photographer: Justin Chin/Bloomberg

Sinochem Energy, a unit of China’s state-owned Sinochem Group, has allowed its application for a Hong Kong initial public offering (IPO) to lapse, the exchange website showed on Wednesday.

Sinochem Energy had sought to raise up to $2 billion from the listing, banking on a new technology platform to boost its valuation.

The company put the IPO on hold late last year because it was likely to only raise around $1.2-$1.3 billion based on early investor feedback, a source with knowledge of the matter told Reuters.

The plan would be shelved for the next one to two years, the source added.

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

Sinochem Energy’s application expired on Wednesday six months after it was filed, according to the Hong Kong Stock Exchange website.

The company did not immediately respond to a request for comment.

Another source told Reuters earlier in January that the IPO had been put on hold partly because of a change in leadership.

Zhang Wei, the company’s general manager, moved to China National Petroleum Corp (CNPC) in December.

Sinochem Energy operates one of China’s largest commercial oil tank farms, with 32 million barrels of storage capacity, and has some 800 petrol stations under its brand.

It launched a technology platform last year to help create value for the IPO, but has since reduced its 1,000-strong workforce by 300 jobs and plans to cut another 200 positions, sources said.

Tough IPO Conditions

Sinochem Energy is not the first company to have to scale back or abandon plans to list in Hong Kong.

Canaan Inc, one of the world’s leading cryptocurrency mining equipment makers, let its application lapse in November while biotech company CanSino Biologics let its application expire earlier this month, the exchange website showed.

Hong Kong took the global crown for volumes raised through IPOs last year, with $36.3 billion sold in the financial centre, according to Refinitiv data.

The performance of IPOs has been a different story, with many companies falling below their offer prices, including smartphone maker Xiaomi Corp and online food delivery-to-ticketing services provider Meituan Dianping .

Other firms have raised a fraction of their original targets, including online ticketing firm Maoyan Entertainment and parenting website Babytree Group.

Market volatility driven by China-U.S. trade tensions and slowing growth in China have cast a shadow on the IPO ambitions of many companies, with bankers expecting 2019 to continue to be challenging.

BOC International, CLSA and Morgan Stanley had been working on Sinochem Energy’s float.

Also Read:

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

Reuters

Singapore Reporter/s

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).

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

  • 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.

Singapore Reporter/s

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).

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

  • 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.