Sinochem Corp, one of the mainland's four major state-owned oil companies, would like to scrap the planned listing of China Jinmao Group, which owns Shanghai's tallest building, and instead opt for an initial public offering for its other real estate arm, Franshion Properties (China), sources said.
Franshion, wholly-owned by Sinochem, is seeking to raise up to US$500 million from a Hong Kong public offering as soon as next month, sources said. Deutsche Bank and DBS Vickers have been hired to arrange the deal.
A source involved in the deal said that instead of a separate listing, Sinochem would like to inject Jin Mao Tower, Jinmao Group's most important asset, into Franshion some time after the offering.
'The injection has not yet been finalised, mainly because China National Cereals, Oils & Foodstuffs Corporation [Cofco], the second major shareholder, would not agree to such an arrangement,' said another source close to the company.
The source said Shanghai-based Jinmao Group still hoped to list to avoid losing control of its assets amid a government-sponsored consolidation of the property sector.
A Jinmao Group spokeswoman said she was not aware of any listing plans while Franshion officials declined to comment.