China's Sinopec to sell $17.5-bn stake in retail business
15 September 2014
Chinaes largest refiner Sinopec Corp yesterday announced plans to sell a 30-per cent stake valued at $17.5-billion stake in its retail arming, marking the country's biggest privatisation push since president Xi Jinping assumed office.
According to BBC, the sale underlines the government's reslove to restructure some of the largest public enterprises. PetroChina, the nation's No1 energy producer, had partly divested its pipeline business, and in the process had raised billions of dollars from domestic institutional investors.
According to commentators, the sale also highlighted the company's hope that outside investments would catalyse growth and reform at its currently low-margin retail unit.
However, according to some analysts, the presence of private equity firms presented a risk of an exit from the business when Sinopec lists the subsidiary in a couple of years.
The retail unit of the company would issue new shares to a group of 25 insurers and funds and raise 107.1 billion yuan ($17.5 billion), according to the filing of the company with the Hong Kong and Shanghai bourses.
The company's shares declined 1.2 today in Hong Kong trade.
Sinopec's retail chain operates 30,000 petrol stations across China and owns over 23,000 convenience stores under the Easy Joy brand, as also oil-product pipelines and storage facilities.
Among the local investors named in the transaction are China Life Insurance as also Chinese white goods manufacturer Haier Electronics and internet giant Tencent.
Sinopec last year signed a preliminary agreement with Tencent to explore introduction of mobile payment systems at its petrol stations.
The company also entered into an agreement with China Taiping Insurance for the sale of life insurance at its petrol stations.
According to Sinopec chairman Fu Chengyu who spoke to local media last week, the company had received bids from 37 interested parties for its retail arm.