China’s Sinochem to float oil refining, storage unit in US$2 billion Hong Kong IPO

Sinochem Energy, China's largest commercial petroleum fuel storage company, aims to raise US$2 billion via an initial public offering in Hong Kong, according to a source close to the deal.

It is the first IPO of a central government-administered oil refining and trading firm since China Petroleum & Chemical (Sinopec)'s simultaneous listing in New York, London and Hong Kong 18 years ago.

The flotation comes as the unit’s parent, Sinochem Corporation, is close to merging with another state-owned firm, China National Chemical Corporation (ChemChina), according to a Caixin report earlier this month.

ChemChina last year completed the country’s biggest overseas acquisition ever, buying out Swiss pesticide firm Syngenta for US$43 billion to create the world's largest industrial chemicals firm, and raking up a huge amount of debt.

The impending merger is one of a string of mergers of central government enterprises aimed at shoring up their stretched balance sheets and enhance their competitiveness.

Beijing-based Sinochem Energy, which owns storage facilities with a combined capacity of 5.1 million tonnes, is 97.8 per cent owned by Sinochem Corporation whose operations span oil and gas, chemicals, agriculture, real estate and finance industries.

It is also one of the nation’s biggest oil and petroleum products traders, with 134 millions of throughput last year. As of March 31 this year, it operated 800 fuel service stations either by itself or with partners, with a combined 1 per cent market share.