Sinopec may revive $142b IPO of retail unit

Sinopec's retail operations include more than 30,500 fuel stations under its own brand as well as convenience stores. 
Sinopec's retail operations include more than 30,500 fuel stations under its own brand as well as convenience stores. PHOTO: REUTERS

BEIJING • China Petroleum & Chemical Corp, the world's biggest oil refiner, is reviving a long-mooted initial public offering of its retail business that could raise as much as US$10 billion (S$14.2 billion), people familiar with the matter said.

The state-owned oil company, known as Sinopec, has asked banks to submit proposals by this month for roles to manage a potential Hong Kong listing next year, according to the people yesterday.

Sinopec shares jumped 4.3 per cent to HK$5.86 at 10:55am in Hong Kong yesterday, headed for their biggest gain since April.

Sinopec's retail operations include more than 30,500 fuel stations under its own brand as well as a network of convenience stores. It proposed a listing of the retail business in 2014, when it sold a 29.99 per cent stake for 107 billion yuan (S$22 billion) to a group of investors including China Life Insurance and billionaire Guo Guangchang's Fosun International.

"Low crude prices and a shaky stock market in Hong Kong this year were the reasons Sinopec hasn't tried aggressively to list," Ms Anna Yu, analyst at China Merchants Securities (HK), said. "It looks more reasonable now for them to try next year if oil prices rise and the appetite for IPOs recovers as many expect."

Sinopec chairman Fu Chengyu retired in May last year and was replaced by Mr Wang Yupu, who had been deputy head of the Chinese Academy of Engineering.

No final decisions have been made, and Sinopec may also decide against floating the business. 

A Beijing-based spokesman for Sinopec declined to comment.

The retail business is not being properly valued within Sinopec, and some of the unit's outside shareholders may be pushing for a listing to monetise their investments, said senior analyst Neil Beveridge at Sanford C. Bernstein in Hong Kong. "The real profit driver in those networks is non-fuel retail. Spinning off these businesses is a better way of enhancing the value of these assets."

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A version of this article appeared in the print edition of The Straits Times on December 15, 2016, with the headline 'Sinopec may revive $142b IPO of retail unit'. Print Edition | Subscribe