China Petrochemical gets nod to fast-track asset injection into Yizheng

Sinopec Yizheng Chemical Fibre, which has agreed to sell its chemical assets to parent China Petroleum & Chemical (Sinopec) and buy the oilfield services and engineering assets of the latter’s parent, China Petrochemical Corp, will save time and costs on completing the major acquisition after the local bourse decided not to subject it to reverse takeover rules.

The decision means China Petrochemical will be able to list the oilfield services assets, valued at 24 billion yuan (HK$30.3 billion), without going through time-consuming compliance procedures similar to that of an initial public offering.

“The listing committee has determined that the reorganisation is an extreme very substantial acquisition which is not subject to reverse takeover rules,” Yizheng said in a filing to Hong Kong’s stock exchange.

A Hong Kong-based investment banker said a “very substantial acquisition” could be completed in as few as two to three months, compared to at least six to nine months for an initial public offering (IPO).

Costs on professional fees on an IPO are also much higher than that of a “very substantial acquisition”, he added.

Reverse takeover is one or a series of acquisitions that constitute a “very substantial acquisition” that the exchange considers an attempt to achieve a listing of assets by circumventing IPO requirements.