Caixin
Oct 18, 2019 05:20 AM
FINANCE

Sinochem Solicits Investors for 3 Units and Weighs Public Listings

Sinochem mulls domestic listings of two financial units after capital increase. Photo: VCG
Sinochem mulls domestic listings of two financial units after capital increase. Photo: VCG

China’s state-owned industrial giant Sinochem Group put three subsidiaries on the market to attract private equity and plans to list two of them next year.

The plan is part of the government’s mixed-ownership reform for state-owned enterprises (SOEs) to improve the efficiency of the state sector by injecting private capital.

The chemical and oil conglomerate is offering stakes in its oil trading and refining unit, Sinochem Energy Co. Ltd., and two financial units, Sinochem Capital Co. Ltd. and Sinochem Capital Investment Management Co. Ltd., according to filings with the Beijing Equity Exchange, an equity transaction platform for state-owned enterprises.

After the capital increase, Sinochem Capital and Sinochem Capital Investment plan to list shares on a mainland Chinese exchange, an insider at Sinochem Group told Caixin.

Sinochem Group will still own no less than 70% of the two financial units after the sale, and new investors will own no more than 30%, according to the capital increase plan.

The listing at Beijing Equity Exchange will expire Dec. 9.

Sinochem Capital is engaged in credit guarantee, futures brokerage and fund management businesses. As of the end of 2017, the company had total assets of 20 billion yuan ($2.8 billion) and in 2018 had net profit of 2.8 billion yuan.

Sinochem Capital Investment is a nonlicensed financial company. It holds stakes in several industrial funds, including Hong Kong-listed financial services provider Far East Horizon Co. Ltd. As of the end of 2017, the company had total assets of 9.4 billion yuan and in 2018 recorded net profit of 990 million yuan.

Sinochem wants investors in the subsidiaries to have registered capital of at least 500 million yuan, or at least 1 billion yuan of managed assets for a fund manager.

Sinochem Group had considered listing its oil unit on a mainland Chinese exchange after it failed to go through with an earlier $2 billion Hong Kong initial public offering (IPO), according to Bloomberg, citing people with knowledge of the matter.

But according to the capital increase plan, the timetable for Sinochem Energy’s IPO is still not clear.

Sinochem Energy filed an IPO application with the Hong Kong Stock Exchange in July last year but let the application expire six months later without proceeding further. Caixin has learned the failure for the Hong Kong listing was because it couldn’t get favorable pricing.

Sinochem Energy generated a profit of 1.2 billion yuan in 2017, down from 2.24 billion yuan in 2016 and 5.2 billion yuan a year earlier, according to the company’s prospectus.

Contact reporter Denise Jia (huijuanjia@caixin.com)

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