China’s slow bull market forces an IPO pivot
The switch to Hong Kong for Syngenta Group’s initial public offering isn’t a surprise, but that doesn’t mean it’s not significant. The Switzerland-based agrichemical giant, bought by ChemChina for $43 billion in 2017 and now under state-run Sinochem Group, is considering a debut in the Asian financial hub after pulling out of its $9 billion listing in Shanghai last year, Bloomberg reported on Tuesday, citing sources. A move like this would underscore why many Chinese companies are turning overseas despite Beijing supporting a “slow bull” market on the mainland.
The story of Syngenta’s listing is proof of why fundraising in Shanghai or Shenzhen can be difficult even in the best of times. The company, which recently completed a major cash acquisition and has the backing of a bona fide national company, initially applied in 2021 to list its shares on the Shanghai Stock Exchange’s technology-focused STAR market, but was later slammed for debt and goodwill by officials. Regulatory resistance ultimately prompted a switch to the exchange’s main board in 2023 after the introduction of a new domestic listing regime that promised a faster path, but the company withdrew its application the following year.
It was a smart move. Even if Syngenta survives in Shanghai, the prospect of raising half its previous target of $9 billion would now raise alarm bells in China’s regulatory offices, which view jumbo share sales as dangerous to their broader national efforts to raise asset prices—hence the country’s financial media emphasis on slow, steady appreciation. There are thoughts that mainland investors will dump their shares to raise the money needed to participate in a massive IPO, triggering a wider selloff.
But while stock sales, including follow-on issuance, in Shanghai raised less than $10 billion in the first three quarters of the year, according to LSEG data, stock sales in Hong Kong raised more than $48 billion, making it clear that officials are not opposed to large stock listings in the overseas hub. China would be happy to let the foreign institutions that dominate trading in the financial hub accept the deal, and Syngenta, with its businesses spread across the globe, would probably benefit from the city’s diverse global investors and less stringent listing procedures. Hong Kong, for its part, will welcome the big deal from the seeds and chemicals giant as evidence that the city has truly recovered from its long-term deal drought.
CONTEXT NEWS
Syngenta Group is considering an initial public offering in Hong Kong more than a year after abandoning its application for a $9 billion debut in Shanghai, Bloomberg reported on November 25, citing unnamed sources.
The Swiss-based agrichemical giant, owned by China’s state-owned Sinochem Holdings, initially applied to list its shares on the Shanghai Stock Exchange’s technology-focused STAR market in 2021 before regulatory resistance prompted a switch to the exchange’s main board in 2023. Syngenta withdrew the application in March 2024.
Stock sales in Hong Kong have raised more than $48 billion so far this year, LSEG data shows, while stock issuances in Shanghai have raised less than $10 billion in the same period.
Source: Reuters
