PetroChina's controversial stock market flotation has received a much-needed boost with international oil giant BP Amoco announcing it will spend as much as US$1 billion to take up 20 per cent of the initial public offering.
The deal, announced last night, is expected to drum up investor confidence as the company and its underwriters, led by Goldman Sachs and China International Capital, try to lure investors away from technology stocks.
The news comes on the heels of the announcement that four Hong Kong conglomerates, including Cheung Kong (Holdings) and Sun Hung Kai Properties (SHKP) have agreed to make a combined investment of $350 million in PetroChina shares.
The two deals mean PetroChina, the mainland's largest producer of oil and gas, has guaranteed more than one-third of its share sale, which is expected to raise between $2.8 billion and $3.5 billion through a dual listing in Hong Kong and New York.
BP Amoco's rescue money had not come cheap, reflecting Beijing's keen intention to make PetroChina's flotation a success, analysts said last night.
In a brief statement, PetroChina said it had signed non-binding letters of intent with BP Amoco to pursue gas and fuel marketing activities in the mainland.
