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Syngenta pulls out of $9 billion Shanghai IPO after “Beijing pressure.”

Chinese authorities put the Swiss agricultural chemicals and seeds company under pressure Syngenta Sources claim the company plans to abandon its long-delayed $9 billion Shanghai IPO due to concerns about its impact on the country's fragile market.

The Chinese state-owned pesticide giant withdrew its IPO bid last Friday, saying the decision was made “after careful consideration.” [the] Industry environment and the company’s own development strategy”.

Syngenta applied for listing on the main board of the Shanghai Stock Exchange Last May, the bank attempted to raise $8.98 billion and passed a review by the exchange's listing committee a month later. Syngenta executives announced just last November that it planned to list in 2024.

However, the company did not receive the green light from China's securities regulator or top leaders in the State Council, a requirement for conducting blockbuster initial public offerings, four people familiar with the matter said.

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The planned IPO ultimately fell through after Syngenta, owned by Sinochem, received informal instructions from Sinochem in March China Securities Regulatory Commission (CSRC) to withdraw its offer for the mega listing, one of the people said.

The reason for Syngenta's withdrawal from the IPO and the manner in which it was handled, which has not been previously reported, underscores that Beijing is prioritizing boosting investor confidence in the secondary market over launching new stock offerings.

The government called on Syngenta to scrap its IPO, even though the company's seeds are essential to food security and China's self-reliance in grain production, which the country's leaders, particularly President Xi Jinping, have strongly encouraged.

The withdrawal stemmed from Chinese authorities' concerns about the potential impact of a large initial public offering on the weak stock market, which has had a miserable start to the year, the four people familiar with the matter said.

Large IPOs have often been cited by analysts as a reason for the plunge in domestic stock markets, as large amounts of funds are frozen when subscriptions are accepted, draining liquidity in the secondary market.

The plunge in Chinese stock markets earlier this year came after mainland stocks underperformed global stocks for three years and deflation at levels not seen since the 2008-2009 global financial crisis.

China's securities regulator has sharply tightened controls on initial public offerings this year, causing companies to abandon domestic listing plans in droves and some to turn to offshore markets such as Hong Kong and New York.

The tougher reviews came after the CSRC announced plans in August last year to slow the pace of initial public offerings and follow-on equity offerings to boost the secondary market in the world's second-largest economy.

ChemChina purchase

From January to March 2024, proceeds raised by IPOs in mainland China fell 82% year-on-year to just $2.4 billion, the smallest quarterly fundraising since the final quarter of 2018, LSEG data showed.

The sudden slowdown in China's IPO market, which was the world's largest in 2022 and 2023, comes after the securities regulator under new Chairman Wu Qing promised last month to step up scrutiny of listing candidates and crack down on any failures .

The listing of Syngenta purchased by ChemChina in 2017 for $43 billion and incorporated into Sinochem in 2021, would have been China's largest IPO and one of the largest globally that year.

The offer has been postponed repeatedly for various reasons since its submission in 2021.

The company initially wanted to participate in Shanghai's technology-focused STAR market, which generally offers high valuations, and submitted the application in June 2021. Two years later, it switched to listing on the main stock exchange.

Syngenta said in its statement last Friday that it would seek to restart the listing process either in China or on another exchange if conditions are right and would also explore alternative sources of financing.

Market analysts previously cited Hong Kong, Zurich and London as possible alternatives for a Syngenta listing.

  • Reuters with additional editing by Sean O'Meara

Read more:

China's move to slow IPOs could impact its weak economy

Shanghai withdraws Syngenta IPO due to mass listing halt

China tightens IPO rules to protect investors with “teeth and horns”.

IPOs in China slump in first half due to slowdown and tighter scrutiny

ChemChina's $10 billion IPO with Syngenta is expected to be the largest IPO of 2021

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