Sinopec to sell S$22b retail business stake

SHANGHAI — China Petroleum and Chemical Corp, Asia’s top refiner, has agreed to sell a 107 billion yuan (S$22 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 per cent stake to 25 investors, including Fosun International, run by billionaire Guo Guangchang.

China Life will buy 10 billion yuan of shares, while gas supplier ENN Energy Holdings has committed four billion yuan, said Sinopec in a Shanghai stock exchange filing yesterday.

The deal comes amid a push by the Chinese government to restructure state-run firms 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 and 23,000 convenience stores.

“The retail business is a big cash cow with the potential to increase margins,” said Mr Gordon Kwan, head of oil and gas research at Nomura International Hong Kong. “There is a lot of scope to make the business better.”

RRJ Capital, run by former Goldman Sachs Group partner Richard Ong, will buy 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’ Chinese securities venture, and bad-loan manager China Cinda Asset Management Co are also among the investors, the filing showed.

The fuel-station business is a huge gold mine whose full potential hasn’t been tapped, said Sinopec chairman Fu Chengyu in a March conference call with analysts.

The sale paves the way for an eventual listing of the unit, said people familiar with the matter in July.

Shares of Sinopec have risen 25 per cent 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 reorganisation, based on a Sept 12filing to the city’s stock exchange.

The state-owned company agreed to sell Sinopec Oilfield Service Corp to Hong Kong-listed polyester maker Sinopec Yizheng Chemical Fibre Co, which it controls.

Last year, Sinopec Engineering Group Co, a unit of China Petrochemical that builds refineries, raised US$1.8 billion (S$2.27 billion) in a Hong Kong initial public offering, data compiled by Bloomberg showed. BLOOMBERG