Sinopec sells USD17.5b retail unit stake to investors

China Petroleum & Chemical Corp., Asia’s top refiner, agreed to sell a 107 billion yuan (USD17.5 billion) stake in its retail business to a group of investors including China Life Insurance Co.
Sinopec, as the company is known, said the unit will sell a combined 29.99 percent stake to 25 investors including Fosun International Ltd., run by billionaire Guo Guangchang. China Life will buy 10 billion yuan of shares while gas supplier ENN Energy Holdings Ltd. committed 4 billion yuan, Sinopec said in a Shanghai stock exchange filing yesterday.
The deal comes amid a push by the Chinese government to restructure state-run companies and allow markets greater sway in resource allocation. The Sinopec retail business runs the country’s biggest network of fuel stations, with more than 30,000 locations, as well as 23,000 convenience stores.
“The retail business is a big cash cow with the potential to increase margins,” Gordon Kwan, head of oil and gas research at Nomura International Hong Kong Ltd., said by phone yesterday. “There is a lot of scope to make the business better.”
RRJ Capital Ltd., run by former Goldman Sachs Group Inc. partner Richard Ong, will purchase a 3.6-billion-yuan stake in the unit while white-goods maker Haier Electronics Group Co. agreed to invest 1.2 billion yuan. Hopu Investment Management Co., a private-equity firm set up by the head of Goldman Sachs’s Chinese securities venture, and bad-loan manager China Cinda Asset Management Co. are also among investors, the filing shows.
The fuel-station business is a “huge gold mine” whose full potential “hasn’t been tapped,” Sinopec Chairman Fu Chengyu said on a March conference call with analysts. The sale paves the way for an eventual listing of the unit, people familiar with the matter said in July.
Shares of Sinopec have risen 25 percent in Hong Kong trading since the start of the year, outpacing a 5.5 percent gain in the benchmark Hang Seng Index.
Sinopec’s parent company, China Petrochemical Corp., will list its petroleum engineering business in Hong Kong as part of a 30.6 billion yuan reorganization, according to a Sept. 12 filing to the city’s stock exchange. The state-owned company agreed to sell Sinopec Oilfield Service Corp. to a Hong Kong- listed polyester maker it controls, Sinopec Yizheng Chemical Fibre Co., the filing shows.
Last year, Sinopec Engineering Group Co., a unit of China Petrochemical that builds refineries, raised $1.8 billion in a Hong Kong initial public offering, data compiled by Bloomberg show. Bloomberg