Shares in Chinese oil giant Sinopec have surged as the firm launched a bid for private investors in a sale of its retail unit which could net more than £12billion.
The Chinese petroleum firm’s board has approved restructuring plans as the country looks to increase private investment in its state-owned industries.
The company, which bought a 49% stake in North Sea operator Talisman for almost £1billion two yeas ago, is looking to sell a 30% stake in its retail arm, which includes its oil sales business and its 30,000-plus petrol station across China.
The unit posted a £2.6billion operating profit in the first nine months of 2013, accounting for 34 percent of the company’s total. Profit from exploration and production was £4.6billion.
The move could promote “professionalism” in Sinopec’s retail business and improve its operating efficiency, the company said in its e-mail, without naming potential investors.
The company did not give further details of the nature of the sale, but analysts have predicted it could net up to £12billion for the firm – the world’s fifth biggest company by revenue.
“It’s viewed as value creative for Sinopec,” said Tony Hann, the head of emerging-market equities at Blackfriars Asset Management Ltd
“It’s an indication authorities are going to deliver on their promise to make these state-owned enterprises more market-oriented.”
The move is its first step to meet a government promise to encourage more private investment in state-owned industries, as part of China’s biggest package of reforms since the 1990s unveiled by its leaders in November. The reform pledge comes as annual growth in China is expected at its slowest in 24 years. The sale is also in line with a trend to move away from energy infrastructure and focus on production.
Sinopec’s American depository receipts surged 8.4 percent to $83.51 in New York, their highest level in two months. The stock is rated a buy by 28 analysts, according to data compiled by Bloomberg. Three analysts recommend holding the stock and three rate it a sell.
“This is probably the first of several such announcements one can expect as the government really pushes this reform of state-owned enterprises through,” said Brendan Ahern, managing director of Krane Fund Advisers.
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