Tianhe Chemicals IPO follows boss' daughter to UBS

Work on Tianhe Chemicals offering follows Joyce Wei to UBS after JP Morgan departure

PUBLISHED : Tuesday, 21 January, 2014, 1:25pm
UPDATED : Wednesday, 22 January, 2014, 4:37pm

Mary had a little lamb, Joyce Wei has an IPO. Wherever the daughter of Tianhe Chemicals chairman Wei Qi goes, follows the potential US$1 billion IPO deal.

First, it was JP Morgan Chase that was supposed to be working on the initial public offering of the Liaoning-based company. Joyce Wei was then working as an investment banking associate there.

Then in November last year, she resigned and joined UBS, and the US bank stopped work on the offering. It would henceforth be handled by the Swiss bank she just joined as a Hong Kong-based junior-level employee in its investment banking section.

Wei Qi is very well connected in Liaoning, where his company is seen as a leading business in the province. Tianhe's partners include major state-owned oil firms such as Sinopec and PetroChina, giving him enormous political clout.

Sources with knowledge of the situation told the South China Morning Post yesterday that JP Morgan no longer had a working relationship with Tianhe, after having worked with it on a potential Hong Kong offering for about two years.

IFR reported earlier in the day that JP Morgan had decided to walk away from the proposed US$1 billion offering of Tianhe primarily because some staff raised concerns over the bank's association with Joyce Wei, who was working at the bank's corporate finance group in its Hong Kong office at the time.

Sources with personal ties to Joyce Wei told the Post that Wei joined UBS late last year. Some of her friends had been receiving messages from Wei's UBS e-mail address since November.

UBS has not yet signed any legally binding agreement to sponsor Tianhe's listing, but it has been playing a leading role in advising Tianhe on the offering since late last year, shortly after Joyce Wei was hired, said the sources, who declined to be named.

Although Joyce Wei is now a full-time employee of UBS, she will not be involved in the upcoming Tianhe offering to avoid conflict of interest, said one of the sources.

A UBS spokesman declined to comment, as did a JP Morgan spokeswoman in Hong Kong.

Gene Buttrill, a partner at US law firm Jones Day, said JP Morgan seemed to be "walking away out of an abundance of caution".

"It is an accepted practice in Asia and in the West to hire well-connected people in order to leverage their contacts for business," Buttrill said.

JP Morgan has been caught up in regulatory probes in the US into its business dealings, including its hiring practices in China.

Tianhe was the second deal JP Morgan has dropped in three months since deciding in November not to participate in the long-awaited China Everbright Bank offering in Hong Kong.

The New York Times reported in August that JP Morgan had landed several deals with the state-owned China Everbright Group after it hired Tang Xiaoning, the son of chairman Tang Shuangning.

Everbright Group is the parent company of Everbright Bank, which went on to raise HK$24.9 billion from its Hong Kong share sale.

Additional reporting by Toh Han Shih