Wall Street banks are helping approach international investors for Syngenta Group’s 65 billion yuan ($9 billion) initial public offering in Shanghai, according to people familiar with the matter, after the Chinese-owned seed giant won regulatory approval for the world’s biggest potential listing this year.
(Bloomberg) — Wall Street banks are helping approach international investors for Syngenta Group’s 65 billion yuan ($9 billion) initial public offering in Shanghai, according to people familiar with the matter, after the Chinese-owned seed giant won regulatory approval for the world’s biggest potential listing this year.
Banks including Citigroup Inc., HSBC Holdings Plc, JPMorgan Chase & Co. and UBS Group AG are working on bringing in foreign investors including cornerstone buyers for the IPO, the people said. The advisers have reached out to sovereign wealth funds in regions including Europe and the Middle East to gauge their interest, said the people, who asked not to be identified as the information is private.
China International Capital Corp. and BOC International Holdings Ltd. are the sponsors of Syngenta’s IPO. While some of the international banks may not have formal roles, they are likely to be assigned junior roles on the offering if they can successfully bring in some investors, the people said.
Deliberations are ongoing and details of the share sale including bank lineup could still change, the people said. Representatives for Citi, JPMorgan, Syngenta and UBS declined to comment, while a representative for HSBC didn’t immediately respond to requests for comment.
Participating in Syngenta’s IPO — likely the world’s biggest this year — would be a major win for global banks that have been trying to make inroads in China’s $10 trillion equity market for years. The domestic IPO market has been dominated by local banks and brokerages, which took up the top 20 spots in the league table rankings, data compiled by Bloomberg show.
Syngenta and its owner Sinochem Holdings Corp. have been working on the listing since at least 2019, two years after the seed giant was acquired for $43 billion in China’s biggest foreign takeover to date. A previous hearing for an application by Syngenta to debut on Shanghai’s Nasdaq-like Star board was abruptly canceled in March, shocking Syngenta’s executives and advisers. The application was withdrawn and resubmitted in May for a listing on the main board. The Shanghai stock exchange last month approved the IPO plans.
Having cornerstone buyers could help increase the success of an IPO as these investors typically agree to hold stock for a set period of time in exchange for early, guaranteed allocation. Sovereign wealth funds, which tend to have long-term views on investments, are prime targets for companies looking to line up subscribers for their share sales. They are even more preferred in China where regulators emphasize market stability.
Syngenta’s mega IPO would also serve as a boost to China’s domestic market where listings have been slowing month-by-month in the six months through June. The volume of newly priced deals in the first half is down by 14% compared to a year earlier, according to data compiled by Bloomberg.
Read More: China’s IPO Activity Seen Fading as Economic Woes Drag on Demand
The company intends to use proceeds from the IPO for high-end agricultural technology research, global acquisitions and long-term debt repayment as well as business expansion and upgrades, it said in its preliminary prospectus. Syngenta’s sales rose to $9.2 billion in the three months ending in March, and its China operations were particularly strong with sales jumping 26% from a year ago to $3 billion.
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