In a major move to restructure its operations, Sinopec Corp, Asia’s largest oil refiner, has announced the sale of a 107.1 billion yuan ($17.5 billion) stake in its retail unit to a group of 25 investors, comprising both Chinese and foreign entities. This sale is part of China’s broader initiative to introduce private capital and expertise into its state-owned enterprises (SOEs) as the government aims to restructure the sector.
Leading investors in this deal include Harvest Fund Management Co Ltd, one of China’s largest asset managers, contributing 15 billion yuan along with its subsidiary, Harvest Capital Management. Other major investors include China Life Insurance, a consortium involving People’s Insurance Group of China Co Ltd, and tech giant Tencent Holdings Ltd, each taking stakes worth 10 billion yuan. Additionally, other notable investors such as Fosun International, ENN Energy Holdings Ltd, and Haier Electronics Group Co Ltd are also participating in the deal.
Among foreign investors, RRJ Capital, an Asia-based private equity firm founded by former Goldman Sachs and Hopu Investment Management dealmaker Richard Ong, has taken a 3.6 billion yuan stake.
The retail unit being sold includes Sinopec’s extensive network of over 30,000 petrol stations, more than 23,000 convenience stores, and a range of oil-product pipelines and storage facilities. This sale is set to improve the value of Sinopec’s low-margin marketing business and strengthen the company’s finances, enabling it to focus on further investments in exploration and production.
Sinopec’s chairman, Fu Chengyu, has indicated that the new investors will bring in valuable expertise to help boost non-fuel sales at its petrol stations. While non-fuel services such as convenience stores, fast food, and car washing represent a significant portion of profits at petrol stations in Western markets, over 99% of Sinopec’s retail sales currently come from fuel. This restructuring aims to diversify and improve the profitability of Sinopec’s retail business by tapping into the expertise of its investors.
The sale represents the largest privatization in China since President Xi Jinping’s administration took office, highlighting the increasing push for reforms and the involvement of private capital in state-run enterprises.
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