Syngenta's Paused IPO Awaits Breakthrough in China Market(AI Translation)
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文｜财新周刊 罗国平
By Luo Guoping, Caixin Weekly
曾经创造中国海外资产并购纪录的全球最大农化集团——先正达历时五年的A股上市之路，几经变故按下暂停键，一时重启无望。
The journey to an A-share listing for Syngenta, the world's largest agrochemical group that once set a record for Chinese overseas asset acquisitions, has been paused after numerous changes over five years, with no immediate prospects for resumption.
2024年3月29日，先正达集团突发公告撤回650亿元主板IPO（首次公开募股）申请，此时距其2023年5月撤回科创板上市申请未满一年。两次撤回申请均与其募资规模巨大、A股难以承受相关；此外，伴随着农化行业转入新一轮下行周期，先正达集团的业绩也增长乏力。
On March 29, 2024, Syngenta Group abruptly announced the withdrawal of its 65 billion yuan application for an initial public offering (IPO) on the main board. This came less than a year after it withdrew its application to list on the STAR Market in May 2023. Both withdrawals were attributed to the massive scale of fundraising involved, which was deemed too substantial for the A-share market to absorb. Additionally, as the agrochemical industry entered a new downturn cycle, Syngenta Group also faced sluggish performance growth.
2020—2022年，先正达集团分别实现营业收入1587.79亿、1817.51亿、2248.45亿元，归母净利润45.39亿、42.84亿、78.64亿元；而这两项指标到2023年双双下降——前9月营业收入1708.29亿元，同比降0.5%；但归母净利润只剩12.79亿元，同比大降86.9%。“先正达的业绩难以满足监管部门对上市门槛的细则要求。”一名金融机构人士对财新称。
From 2020 to 2022, Syngenta Group achieved operating revenues of RMB 158.779 billion, RMB 181.751 billion, and RMB 224.845 billion respectively, with net profits attributable to the parent company amounting to RMB 4.539 billion, RMB 4.284 billion, and RMB 7.864 billion. However, both metrics declined in 2023—operating revenue for the first nine months was RMB 170.829 billion, a year-on-year decrease of 0.5%; while net profit attributable to the parent plummeted to just RMB 1.279 billion, down by a staggering 86.9%. "Syngenta's performance does not meet the regulatory requirements for listing," a financial sector source told Caixin.
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- Syngenta Group, a leading global agrochemical company, has paused its planned IPO on China's A-share market after withdrawing a 65 billion yuan application in March 2024. This follows a previous withdrawal from the STAR Market in May 2023. The withdrawals were attributed to the large fundraising scale challenging for the A-share market to absorb and a downturn in the agrochemical industry affecting Syngenta's performance.
- From 2020 to 2022, Syngenta Group reported increasing revenues but faced a significant profit drop by 86.9% in the first nine months of 2023 compared to the same period in 2022. Financial challenges included high initial financial leverage and interest expenses from debts incurred during aggressive acquisitions, including the $49 billion purchase of Swiss Syngenta by ChemChina.
- Despite setbacks, Syngenta remains committed to eventually relisting, focusing on enhancing its R&D capabilities within China to meet local agricultural transformation needs. The group aims to leverage its global network to promote Chinese agricultural innovation globally while facing stringent regulatory environments and market cultivation challenges for genetically modified (GM) crops in China.
Syngenta Group, the world's largest agrochemical company, has faced significant challenges in its attempt to list on China's A-share market. Initially, the company withdrew its IPO application from the STAR Market in May 2023 and then from the main board in March 2024, citing the large scale of fundraising as a major factor. The agrochemical industry's downturn and Syngenta's sluggish performance growth further complicated these efforts [para. 1].
From 2020 to 2022, Syngenta achieved substantial operating revenues but saw a decline in both revenue and net profit in 2023. This financial downturn led to concerns that Syngenta did not meet regulatory listing requirements [para. 1]. Despite being a leading global player in crop protection and seeds, with significant market shares worldwide and across all core agricultural inputs in China, Syngenta has struggled with high financial leverage primarily due to debt incurred from its acquisition by ChemChina [para. 1][para. 5].
The integration of ChemChina and Sinochem Group’s agricultural assets into Syngenta Group was completed in June 2019. This reorganization aimed at consolidating their respective strengths to create a more competitive entity globally [para. 5]. However, this merger also brought high levels of debt which have since weighed heavily on Syngenta’s financial performance [para. 5].
In addition to financial challenges, regulatory hurdles have also impeded Syngenta’s listing plans. The company faced intense scrutiny during its application process on the STAR Market and later on the main board, with regulators posing numerous questions about its business operations and financial health [para. 6]. These inquiries reflected broader concerns about the sustainability of Syngenta’s business model amidst fluctuating market conditions.
Despite these setbacks, Syngenta continues to focus on innovation within China’s agricultural sector. The company aims to leverage its global technology base to support China's transition towards more technologically advanced agriculture. This includes enhancing R&D capabilities locally and adapting global innovations for the Chinese market [para. 7].
The future strategy involves not only improving operational efficiencies but also continuing substantial investments in research and development. This approach is expected to drive growth through innovation rather than expansion alone [para. 8]. However, environmental regulations and shifts towards sustainable farming practices pose additional challenges for Syngenta as it navigates changes within the global agrochemical industry.
Overall, while facing ongoing financial pressures and regulatory complexities, Syngenta remains committed to advancing agricultural technology both globally and within China’s rapidly transforming agricultural landscape [para. 7][para. 8].
- Syngenta Group
先正达集团 - Syngenta Group, a global agrochemical giant, faced challenges with its A-share IPO in China due to large fundraising scale and weak performance in the agricultural chemical industry's downturn. Despite being a leader in crop protection and ranking third globally in seeds, Syngenta withdrew its IPO applications twice within a year. The group was formed by merging assets from ChemChina and Sinochem, including the acquisition of Swiss Syngenta for about $43 billion.
- Sinochem Group Co., Ltd.
中国中化集团有限公司 - Sinochem Group Co., Ltd., referred to as "中化集团" in Chinese, is a key state-owned enterprise directly managed by the Chinese central government. In June 2019, it merged with China National Chemical Corporation (ChemChina) to form a new entity under which various agricultural chemical assets were consolidated, including those from the acquisition of Syngenta. This merger aimed to strengthen its position in the global agrochemical market.
- ChemChina
中国化工集团有限公司 - ChemChina, officially known as China National Chemical Corporation, is a state-owned enterprise in China. It acquired Swiss agribusiness giant Syngenta in 2017 for approximately $43 billion, marking the largest overseas acquisition by a Chinese company at that time. The deal was primarily financed through loans from global financial institutions. ChemChina has since merged with Sinochem to form a new entity under which Syngenta operates.
- Adama Ltd.
安道麦 - Adama Ltd., headquartered in Israel, is the world's largest provider of non-patent-protected crop protection products. It is one of the business units within Syngenta Group, focusing on innovation and offering a broad range of herbicides, insecticides, and fungicides to meet global agricultural needs.
- Yangnong Chemical
扬农化工 - Yangnong Chemical, referred to within the context of Syngenta Group's restructuring and asset integration, is a key agricultural chemical asset. It was part of the assets injected into Syngenta Group following the merger and reorganization involving China National Chemical Corporation (ChemChina) and Sinochem Group. Yangnong Chemical is listed on the Shanghai Stock Exchange under ticker 600486.SH.
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