* Plans to let non-state investors buy up to 30 pct of
retail oil arm
* Retail business owns more than 30,000 petrol stations
* Stake sale may create net cash inflow of over 50 bln
* Sinopec shares soar 9 pct in HK & Shanghai after surging
in New York
(Recasts with share move, comments from company source and
By Charlie Zhu
HONG KONG, Feb 20 Sinopec Corp, Asia's
largest oil refiner, plans to sell up to 30 percent of its
retail oil business to private investors in a multi-billion
dollar restructuring aimed at boosting the value of its
sprawling downstream arm.
The proposed stake sale in state-run Sinopec's marketing
arm, which owns more than 30,000 petrol stations, comes as China
is looking at promoting private investment in the country's oil
industry and vowed in November to let the private sector play a
bigger role in the economy.
Private investors have long complained of a lack of access
to the lucrative industry in the oil and gas sector of the
world's largest energy user, which is dominated by Sinopec and
other state oil giants such as PetroChina
and CNOOC Ltd .
Sinopec shares soared about 9 percent in Hong Kong and
Shanghai on Thursday morning in reaction to the news, following
an 8.4 percent rally overnight in its New York-traded shares.
In a filing with the Hong Kong bourse late on Wednesday, the
company said its board had passed a resolution to restructure
the oil product marketing activities and "diversify the
ownership by way of introducing social and private capital".
The board has authorised the company to bring in "social and
private investors" who would acquire up to 30 percent of the
business, said Sinopec, formally known as China Petroleum &
Chemical Corp .
The statement gave no further details.
A person close to Sinopec's strategy on the restructuring
told Reuters that Sinopec chairman Fu Chengyu hopes that a
revamp of its massive marketing arm, which mainly includes more
than 30,000 petrol stations across the country, and a sale of
the stake to non-state investors would help revalue the business
"Fu believes the marketing business has been seriously
undervalued by the market," said the industry source, who spoke
on condition of anonymity. "Also they hope to bring in some
industry expertise to run gas stations in a more professional
way and make more use of the vast retail network."
The marketing and distribution division of Sinopec, which
also engages in oil and gas exploration and production, refining
and chemicals production, accounts for nearly half of the
group's annual total operating profits.
The segment posted an unaudited operating profit of 27.03
billion yuan ($4.46 billion) for the first nine months of 2013,
down 10.5 percent year on year, partly because of a slowing
The divestment should "enable Sinopec to begin to unlock the
enormous hidden value within the company", Neil Beveridge,
senior energy analyst at Bernstein Research, wrote in a note to
Operating profit at Sinopec's marketing division is expected
to rise to 52 billion yuan in 2015 from 42 billion yuan in 2013,
Hong Kong-based analysts expect Sinopec to raise several
billion dollars from the sale of a 30 percent stake in the
marketing arm and use the proceeds to modernise and expand the
business, lower the gearing ratio and boost investment in
exploration and production.
Andy Meng, energy analyst at Morgan Stanley in Hong Kong,
said the sale of 30 percent stake may create a net cash inflow
of more than 50 billion yuan to Sinopec.
It is unclear whether Sinopec would divest the stake through
a trade sale to investors or through an initial public offering
of shares on the stock market.
The possibility of bringing in a foreign strategic investor
into the marketing business also can't be ruled out, analysts
Sinopec's move to take in private investors comes after
PetroChina, the country's No. 1 oil and gas producer, divested
part of its pipeline activities in the past two years, raising
billions of dollars from domestic institutional investors.
($1 = 6.0673 Chinese yuan)
(Reporting by Charlie Zhu and Meg Shen; Editing by Tom Pfeiffer
and Muralikumar Anantharaman)