A university teacher-turned-investment manager and his private equity partners are expected to realise major gains from their leveraged buyout two years ago when one of the mainland's seven suppliers of oil and gas trunk pipelines seeks to list in Hong Kong.
Yan Tangfeng, a former teacher and secretary of the faculty's party committee at Shandong University of Technology, and his financiers, Apollo Asia Opportunity Master Fund and SEAVI Advent Equity V (A), are to sell 120 million existing shares in Shengli Oil & Gas Pipe Holdings' share offering, which begins today.
The share offering will raise between HK$1.3 billion and HK$1.94 billion, of which HK$217 million to HK$320 million will go to Yan and his partners. Yan will still retain a majority stake in the company after the initial public offering.
After obtaining a 138 million yuan (HK$156.64 million) loan from Apollo and SEAVI in late 2007, Yan paid 116.51 million yuan for Shengli.
He bought it from its 675 employees, who had privatised the previously state-owned firm in 2004 for 73.54 million yuan.
After the share offering and Shengli's listing in Hong Kong scheduled for December 18, Yan's 60.21 per cent stake in the company will be worth HK$3.25 billion, Apollo's 3.91 per cent stake will be worth 211.5 million yuan and SEAVI's 5.87 per cent stake will be worth HK$317.16 million, assuming it prices its shares at the mid-point of the HK$1.81 to HK$2.69 offer price. Set up in 1972, Shengli was part of the country's second-largest oil and gas producer, state-controlled China Petroleum & Chemical Corp (Sinopec), which operates the Shengli oilfield in Shandong.
In 2004, it was one of more than 70 non-core subsidiaries spun off by Sinopec to its employees to sharpen its business focus and enhance efficiencies.