Sinochem seeks Franshion IPO in place of Jinmao
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.
Jinmao Group, 54 per cent owned by Sinochem and 22 per cent by Cofco, was reported late last year to be planning an initial public offering in Hong Kong or Shanghai. China Minmetals Corp also owns a stake in the firm, according to the Jinmao Group website.
Given the uncertainty of its listing plans, Jinmao Group was looking to spin off non-core assets, including its property management and car rental units, for listing as soon as next year in Hong Kong, the source said.
A listed vehicle could provide Jinmao Group with an option to inject Jin Mao Tower for a backdoor listing later if the building didn't go to Franshion, he said.
Jinmao Group has a joint venture with Imtech Germany that offers management and other services for Jin Mao Tower.
The company also has a joint venture with Shanghai Jinjiang Automobile to provide limousine services, commercial vehicle rental and pan-region tours.
'Jinmao Group is testing the waters by trying to get non-core business assets listed first,' the source said. 'Getting listed is the only way to avoid being reshuffled with other real estate assets into other state-owned central enterprises.'
Established in February 1993, Jinmao Group has a registered capital of 2.635 billion yuan and is expanding in the hotel sector. It already owns Grand Hyatt Shanghai, Hilton Sanya Resort & Spa, and Jin Mao Ritz-Carlton Sanya.
Franshion, incorporated in Hong Kong in June 2004 with a registered capital of HK$700 million, specialises in real estate development and management of medium- and high-end residential projects and office buildings, according to Sinochem's website. It has developed several projects in Shanghai.
Company projects currently under development include Shanghai's Gaoyang International Passenger Transport Centre, Beijing's ChemSunny Plaza and Every Garden, a seascape housing project in Zhuhai.
Listing plans
Sinochem would like to inject Jin Mao Tower into Franshion after the IPO
The amount, in million US dollars, that Franshion Properties (China) hopes to raise 500