ChemChina setting up $5
billion fund to help finance Syngenta bid: Basis Point
Send a link to a friend
[December 01, 2016]
By Carol Zhong
HONG
KONG (Reuters) - China National Chemical Corp (ChemChina) is setting up
a fund that will aim to raise $5 billion to help finance its purchase of
Swiss seeds group Syngenta, two sources with direct knowledge of the
matter told Thomson Reuters publication Basis Point.
The financing structure entails investors committing to the fund, which
would in turn own equity in Syngenta, the people said - a move that
would help the state-owned firm lower the debt burden of its planned $43
billion acquisition.
Overall, ChemChina is targeting about $25 billion in equity commitments
to help fund the largest ever foreign purchase by a Chinese firm, the
people added.
Sources have previously said it has arranged $32.9 billion in bridge
loans with more than 20 lenders, including Chinese, European and other
Asian institutions. That level of gearing is, however, viewed as too
high for comfort by lenders, investors and analysts alike.
![](http://archives.lincolndailynews.com/2016/Dec/01/images/ads/current/mcentire_sda_FLYERS_2016.png)
The success of the deal, which still must clear regulatory hurdles, is
key for China which is eager to improve domestic food production.
Chinese agricultural yields are more than 40 percent lower than those of
most Western countries and China has less than 10 percent of the world's
arable land but more than 20 percent of the world's population,
according to Fitch ratings agency.
ChemChina has hired state-run Postal Savings Bank of China (PSBC)
<1658.HK> to arrange the fund, the people added, in a coup for the bank
as it only set up its investment banking department about a year ago.
The sources declined to be identified as the discussions are
confidential. Representatives for ChemChina did not respond to telephone
and emailed requests for comment. PSBC declined to comment.
[to top of second column] |
![](../images/120116pics/busine29.jpg)
A woman checks her phone at the headquarters of China National
Chemical Corporation in Beijing, July 20, 2009.
REUTERS/Stringer/File Photo
![](../images/ads/current/demay_inv-lda081412.png)
PSBC has reached out to potential investors including some trust
companies and investment funds in China, the people added.
In addition to the planned fund, ChemChina has secured $5 billion in
equity from Feng Xin Jian Da LP, a fund managed by CITIC Trust Co Ltd, a
unit of conglomerate CITIC Ltd, sources have previously said.
It was not immediately clear in what other ways ChemChina aims to boost
the equity financing portion of the deal.
EU antitrust regulators opened an in-depth investigation into
ChemChina's bid in October, saying the companies had not allayed
concerns over the deal. The deadline for the decision has been pushed
back by 10 days to March 29.
(Reporting by Carol Zhong at Basis Point; Additional reporting by Aizhu
Chen in BEIJING and Julie Zhu in HONG KONG; Writing by Denny Thomas;
Editing by Prakash Chakravarti and Edwina Gibbs)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2016/Dec/01/images/ads/current/christian_village_sda_031616.png) |