Syngenta gets the nod to launch US$9.1 billion Shanghai IPO

Shanghai’s stock exchange has approved Syngenta Group’s 65 billion yuan (US$9.1 billion) initial public offering (IPO), giving its green light to what could be the world’s largest equities sale this year in China’s commercial hub.

Syngenta planned to sell up to 2.78 billion yuan-denominated A-shares to fund its research and development, upgrade its agricultural platform, support global acquisitions and repay long-term debts, according to its draft prospectus.

The company was queried on its business scope and its position in the global agrochemicals industry to determine whether it qualified as a blue-chip company eligible to list on the Main Board of China’s premier equity market, the Shanghai Stock Exchange said in a statement. It was also asked about its corporate governance and internal controls to ensure that the risks from its worldwide operations and acquisitions are controllable, the exchange said.

The green light was a deft turnaround for Syngenta, after a dramatic snag in March when the Shanghai exchange abruptly scrapped its IPO review on the eve of the scheduled meeting. The Switzerland-based company, 99.1-per cent owned by state-owned China National Chemical Corporation (ChemChina) since 2017, last month formally withdrew its Star Market IPO plan to switch to Shanghai’s Main Board.

A building with the logo of the China National Chemical Corp. (ChemChina) in Beijing on February 3, 2016. Photo: Agence France-Presse.

Syngenta’s IPO – underwritten by China International Capital Corp (CICC), BOC International and Citic Securities – would eclipse the US$4.37 billion offering last month by the US consumer health company Kenvue, according to Bloomberg’s data. It would also be China’s second-largest offering after Agricultural Bank of China’s US$10 billion flotation in 2010.

Chinese companies have raised a combined US$29.8 billion from IPOs on the Shanghai, Shenzhen and Beijing exchanges this year, exceeding US$2.1 billion in Hong Kong and US$6.1 billion in New York, Bloomberg data shows.

The sale, expected to open to retail investors in the coming months, will test the appetite for new offerings on China’s 82-trillion yuan stock market, where sentiments have remained skittish amid sputtering economic growth. China’s CSI 300 benchmark has risen 2.4 per cent this year, placing it 36th out of 87 equity indices in Asia, according to Bloomberg’s data.

Syngenta Group’s global headquarters in Basel, Switzerland. Photo: Handout

Syngenta will not be immediately eligible for the so-called Northbound trading by offshore investors via the Shanghai-Hong Kong Stock Connect trans-border investment channel, but must await the review and approval by the Shanghai Stock Exchange before global funds can dabble in its shares via accounts in Hong Kong.

Still, the blockbuster offer comes hot on the heels of an IPO overhaul in mainland China, which replaced the previous price ceiling of 23 times earnings with market pricing based on demand.

The registration-based IPO rules kicked in formally in early February after a three-year trial that involved smaller companies. Before the reform, the China Securities Regulatory Commission (CSRC) was responsible for reviewing listing documents, and had the final say in pricing shares.

Syngenta was bought out by ChemChina for US$43 billion in 2017, the biggest overseas takeover by a Chinese company. After the acquisition, the agrochemicals group has been expanding its business scope, acquiring a stake in Israeli crop-protection company ADAMA and merging the agricultural units of ChemChina and Sinochem Group.

The 250-year-old group based in Basel is at the cutting edge of biotechnology and developed the first genetically modified cereal for human consumption. It fully sequenced the DNA of the rice genome in 2001.

Syngenta develops, produces and commercialises a wide range of seeds, as well as crop protection and crop nutrition products, along with the provision of modern agricultural services. The company aims to help farmers increase their yields and adopt sustainable practices.