China National Chemical Corp is targeting to raise up to US$10bn in a private fundraising for its agrochemicals business before listing the unit in the Chinese A-share market, according to people close to the deal.
The agrochemicals unit of the state-owned chemical giant, also known as ChemChina, is expected to include Swiss pesticides and seeds producer Syngenta, Shenzhen-listed global crop protection company Adama and other agrochemicals assets.
ChemChina is working with Chinese and international advisors to raise funds in the renminbi market and aims to complete the deal in the first half of 2020, according to the people.
The company is expected to begin working on an A-share IPO for the agrochemicals unit next year after wrapping up the private financing, said the people, adding it is hard to estimate the size of the IPO as it depends on regulatory approval and market conditions.
Given the scale of ChemChina's assets, a public listing is likely to be the biggest ever from the chemical industry, surpassing Petronas Chemicals Group’s US$4.8bn IPO in 2010.
ChemChina acquired Syngenta for US$43bn in 2017. Erik Fyrwald, Syngenta chief executive officer, said in a media interview in October that the company planned to list in 2.5 years.
In early November, Frank Ning Gao Ning, chairman of ChemChina and Sinochem Group, said the company was working on plans to list Syngenta on the Shanghai stock exchange, according to a Reuters report.
A spin-off of the agrochemicals business will help ChemChina lower a debt burden that has ballooned through years of acquisitions, mostly with the Syngenta purchase. It has Rmb83.4bn (US$11.9bn) of debt maturing next year, according to public filings.
Rating agency Fitch, which rates the company A– on account of its central government ownership, estimates the company’s trailing-12-month debt/Ebitda remained at roughly 11x as at the end of June, with interest payments over the previous 12 months equal to 2.3 times Ebitda.
ChemChina did not respond to emails seeking comment.