Sinopec wins Cabinet approval for retail unit’s IPO

HONG KONG • Sinopec, China’s top oil refiner, won approval from the country’s Cabinet for a long-awaited initial public offering (IPO) of the retail unit that runs its vast chain of petrol stations and convenience stores, people with knowledge of the matter said.

The green light from the State Council clears the final Chinese regulatory hurdle for the deal and means the IPO arrangers can move forward with detailed work on the listing, according to the people.

Sinopec aims to sell shares of the business in Hong Kong this year, though it hasn’t set a definitive timetable for when preparations will start, the people said, asking not to be identified because the information is private.

The unit, known as Sinopec Marketing Co, may seek to raise about US$5 billion to US$6 billion (RM24.61 billion) in the offering, the people said. The target has been reduced, from the US$10 billion originally mooted in 2016, due to the company’s weakening growth prospects and concerns about market appetite for such a large issuance, according to the people.

Sinopec’s retail operations include more than 30,600 fuel stations and nearly 27,000 convenience stores, according to its third-quarter report. The oil giant first proposed a listing in 2014, when it sold a stake in the unit to a group of investors including China Life Insurance Co and billionaire Guo Guangchang’s Fosun International Ltd.

Any deal would add to the US$35 billion of first-time share sales in Hong Kong over the last 12 months, according to data compiled by Bloomberg. Plans for the potential IPO are still at an early stage, and details including size could change, the people said.

The company would still need to seek listing approval from the Hong Kong stock exchange before the transaction goes ahead.

A representative for Sinopec, whose formal name is China Petroleum & Chemical Corp, said he couldn’t immediately comment. The Chinese securities regulator didn’t imme- diately respond to faxed queries. — Bloomberg