MOSCOW (MRC) -- China's Sinochem Group has tapped three banks, including Morgan Stanley, to work on the possible Hong Kong listing of its key oil assets, as it seeks to raise capital and revive the company, reported Reuters with reference to four people with knowledge of the matter.
Citic Securities and BOC International are also advising China's fourth-largest oil company on the planned initial public offering, which will likely take place in the second half of next year, the people said.
No formal mandate for the IPO has been awarded yet, they said, adding preparations for the market float are at an early stage, and unlisted Sinochem has yet to decide the size of the public offering.
The IPO plan also comes amid Beijing's latest push to revive its bloated state-owned enterprise sector via the so-called mixed-ownership reforms by injecting private capital into state enterprises.
"Our people are preparing for it (IPO) ... but it's still far away," Sinochem Chairman Ning Gaoning told Reuters on the sidelines of the Communist Party Congress.
The planned listing will likely include Sinochem's refining, fuel marketing, trading and storing assets, but not its struggling upstream business - mostly overseas oil and gas production - three of the people said.
"These assets are considered the best under the company," said one person who was briefed by Sinochem management, referring to the businesses likely to be part of the listing.
"Sinochem is looking to offload its upstream business to the government rather than to investors."
All the people declined to be named as details of the listing process are not yet public. Sinochem did not respond to a request for comment. Morgan Stanley, Citic and BOCI declined to comment.
Hit by low oil prices, Sinochem has aimed to shift from oil exploration and production to the more value-added refining and retailing businesses. It has been looking to sell a stake in Brazil's Peregrino offshore oilfield.
As MRC wrote previously, in late 2015, Sinochem received approval from the Fujian Provincial Development and Reform Commission for a refinery expansion and petrochemicals project in Quanzhou, the China Chemical Fiber Group reporte. The USD 6.8-billion project will expand the refinery by 25 % to 300,000 b/d from the current 240,000 b/d capacity. The company will also add a 1-million-t/y ethylene cracker, an 800,000-t/y paraxylene unit, a 400,000-t/y polyethylene plant, an aromatics extraction unit with 300,000 t/y of capacity, and secondary units. A schedule for the project was not given.
Sinochem Group engages in energy, agriculture, chemicals, real estate, and finance service businesses in China and internationally. It is involved in the exploration and production, refining and trading, warehousing and logistics, and distribution and retailing of oil and gas. The company also produces and distributes fertilizers, such as nitrogen, phosphate, potash, and other fertilizers.
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