(Bloomberg) – Syngenta Group’s planned 65 billion yuan (US$9.26 billion) IPO, potentially the world’s largest this year, is expected to boost foreign fund interest in China’s onshore stock market.
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The Swiss-based seed giant’s regulatory filing was accepted on Friday to conduct an offering on the main bourse of the Shanghai Stock Exchange. The Chinese owner is relaunching a plan that stalled in March after the exchange abruptly canceled a hearing for a debut on the smaller, tech-focused Star Board.
Moving Syngenta’s IPO to the board “makes sense as it provides access to a more mature market and a larger liquidity base,” said Ben Harburg, managing partner at Magic Stone Alternative Investment Ltd. in Beijing. The listing of the Swiss company aligns with China’s drive to attract capital through regulatory improvements and investment tools such as qualified foreign investors, he added.
Traditionally, IPOs on Chinese stock exchanges have mostly focused on domestic investors, which also limited the potential investment pool. Sinochem Holdings Corp., a Chinese state-owned company and owner of Syngenta, had been in talks with Chinese authorities about a possible reduction in the size of its fundraising to alleviate concerns that a large supply could put pressure on liquidity in the market, Bloomberg reported last month .
“The case is fascinating and all eyes are on the SHEX approval process and the success of the IPO,” said Jason Hsu, Chief Investment Officer at Rayliant Global Advisors Ltd. “SHEX and Beijing want to see a success story here.” Beijing wants more global companies to be listed on Chinese stock exchanges. This will further legitimize China as a viable money hub.”
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Onshore listings generated more revenue than any other country last year. Although the pace of listings has slowed in 2023, raising $26.9 billion year-to-date, the amount is still higher than the total for listings in the US, Hong Kong, Europe and Japan.
China has been working to make it easier to raise funds from stock sales in the Chinese market. Earlier this year, a registration-based system for listings on all non-Star Board exchanges was expanded. The move shortened review deadlines and gave exchanges responsibility for reviewing the eligibility of IPO candidates. It also made the listing process quicker and easier, bringing it closer to practices in foreign markets.
The Syngenta bid in China has been in the works since 2019.
The listing “will be a tremendous milestone in the development of China’s stock markets and exchanges,” said Sandy Mehta, CEO and Investment Officer at Value Investment Principals Ltd. It will “continue to help the government’s declared political goal of strengthening Shanghai’s importance as a major city.” Financial center with growing wealth management and brokerage businesses. There will be interest from global investors, particularly larger players already active in the Chinese and Hong Kong markets.”
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