Sinochem Plans to Raise to the Tune of 35 Billion Yuan in Its IPO
To facilitate the construction of an oil refinery plant, Sinochem Corp. plans to pile up around 35 billion in Yuan, a figure that stands at $5.5 billion at the current exchange rates. Sinochem’s IPO, if successful, will be China’s sixth biggest IPO this year.
According to data posted on Ministry of Environmental Protection’s website, Sinochem Corp., China’s largest chemical products supplier plans to sell about 26.5 billion shares in an initial public offering in Shanghai. Proceeds from the IPO will be used to erect a 241,000 barrel-per-day, or a 12 million metric ton-per-day oil refinery plant in Fujian.
Data put together by news website Bloomberg shows that several companies in China have raised as much as $37 billion in IPOs this year, a figure doubling one recorded in Hong Kong. According to Bloomberg data, Sinochem Corp.’s IPO comes a few days shy of a month after Sinohydro Group Ltd., China’s largest constructor of hydroelectric dams, piled up 13.5 billion Yuan in what was China’s biggest IPO of 2011.
Sandy Mehta, CEO at Hong Kong-based Value Investment Principals Ltd. said that this move would open up floodgates for more IPOs. “Chinese stocks are very cheap in terms of valuation, and the bearishness on economy and banks is very undone. China has now stopped tightening.” He added.
To tame inflation that threatened to suffocate its economy, China curbed bank lending by raising interest rates. All the same, this essential move did not stop Shanghai Composite Index from losing 11 percent this year. In similar fashion, Sinohydro Group Ltd. slumped 6.8 % since it started trading on the 18th of October.
Industrial output grew at a snail’s pace while home sales fell fall even as inflation cooled off throughout the month of October. In relation to this, a survey conducted by Bloomberg showed that majority of economists in China expected that the country would loosen monetary or fiscal policy without lowering interest rates.
According to its website, the Beijing-based Sinochem is the fourth-largest oil company in China. To boot, it has assets in real estate and agriculture. Last year, the company recorded a 9.1 billion Yuan in profits sheared off from 335.5 billion Yuan of gross revenues.
Sinochem’s parent company, the Sinochem Group Ltd., is also parent to several other listed companies including Sinofert Holdings Ltd., Sinochem International Corp., and Far East Horizon Ltd.
In related news, China Railway Materials Commercial Co. also has plans to raise over 14.7 billion Yuan in an IPO, funds that will be used to finance several of its projects. This is in accordance to a statement from the company posted yesterday on the Ministry of Environmental Protection’s website.