Syngenta Group’s planned 65 billion yuan ($9.26 billion) initial public offering, potentially the world’s biggest this year, is expected to boost foreign fund interest in China’s onshore equities market.
The Switzerland-based seed giant had its listing application accepted on Friday to move ahead with an offering on the main board of the Shanghai Stock Exchange. Its Chinese owner is resuming a plan that stalled in March after the bourse abruptly canceled a hearing for a debut on the smaller, tech-focused Star Board.
Shifting Syngenta’s IPO to the main board “makes sense as it provides access to a more mature market and larger liquidity base,” said Ben Harburg, managing partner at Magic Stone Alternative Investment Ltd. in Beijing. The listing of the Swiss firm matches China’s drive to attract capital through regulatory improvements and investment vehicles such as qualified foreign investors, he added.
Traditionally, IPOs on Chinese exchanges have been mostly focused on domestic investors, which also has limited the potential investment pool. Sinochem Holdings Corp., a Chinese state-owned company and Syngenta’s owner, had discussed a potential reduction in the fundraising size with Chinese authorities to mollify concerns that a large offering could put pressure on liquidity in the market, Bloomberg reported last month.
“The case is intriguing and all eyes are on the SHEX’s approval process and the success of the IPO,” said Jason Hsu, chief investment officer at Rayliant Global Advisors Ltd. “SHEX and Beijing want to see a success story here. Beijing wants more global firms to list on Chinese stock exchanges. This will further legitimize China as a viable money center.”
Listings onshore last year raised more proceeds than in any other country. While the pace of offerings has slowed in 2023, with $26.9 billion raised year-to-date, the amount is still higher than the combined tally for listings in the US, Hong Kong, Europe and Japan.
China has been working on simplifying fundraising from equity sales in the nation’s market. Earlier this year, it expanded a registration-based system for listings on all exchanges beyond the Star Board. The move shortened review periods, and gave exchanges responsibility for vetting the eligibility of IPO candidates. It also made the listing process quicker and simpler, drawing closer to practices in foreign markets.
The Syngenta offering in China has been in the works since 2019.
The listing “will be a huge feather in the cap of Chinese equity markets and exchanges,” said Sandy Mehta, chief executive and investment officer at Value Investment Principals Ltd. It will “further the government’s stated policy goal of increasing Shanghai’s prominence as a major financial center, with growing asset management and brokerage businesses. There will be an appetite from global investors, particularly larger players who are already active in China and Hong Kong markets.”