State-run chemicals company ChemChina, the little-known acquisition pioneer that won the affection of private equity firm Blackstone, is looking for yet more strategic investment as it scouts for more overseas assets, its chief executive said on Friday.
Often confused in its mandarin name with No.4 oil firm Sinochem Group, China National Chemical Corp is dwarfed by the country's state energy giants, with under a tenth of Sinopec Corp's revenue and a fraction its oil refining business, but it has much it can boast about.
The firm made its name with a string of acquisitions in 2006 totaling 9.4 billion yuan ($1.4 billion) including Australia's top plastics maker Qenos, France's organic silicone producer Rhodia and animal feed additive firm Adisseo.
Now 20 months after its $600 million deal to bring in U.S. private equity Blackstone as a strategic investor, the 5-year-old state chemical group is seeking more similar alliances and hunting for new assets that will bolster its core sectors: high-end specialty chemicals and life sciences products.
We want to introduce strategic investors for each of our six business segments, to better our management and build up a multi-source investment structure, Chief Executive Ren Jianxin told Reuters in an interview in its neat 12-storey office block.
Because of the time-consuming restructuring, Ren shrugged off a timeline for a public stock offering mooted a few years back.
After Blackstone bought a 20 percent stake in China National Bluestar, ChemChina's special chemicals arm, its farm chemicals department could be the next to line up an investor, possibly a U.S. or European fund, Ren said, without elaboration.
Despite being seemingly quiet on the overseas acquisition front, ChemChina has not stopped its hunt for quality assets, mostly in Europe and the United States, Ren said, taking pride in the firms bought in 2006 that have since grown in valuation by an average eight-fold.
It's not that we wanted it quiet but there was no right opportunity, said Ren, who in early 2008 withdrew a then A$2 billion bid for Australia's agrichemical firm Nufarm due to an offer he deemed too pricey. Sinochem Corp is now talking to the Australian company.
We have proven to Beijing to be a successful acquirer.
ChemChina is known to the global chemical industry and investors as China's most market-oriented SOE, a savvy deal-maker and truly international company that hires some 15 westerners as senior executives, unusual among Chinese state firms.
The firm and its chief, a former communist youth league leader, however, keep a low profile at home.
We position ourself in the middle of the supply chain. We don't compete with big oil for crude supplies and avoid competition with private businesses for end products, said Ren, who built the $18-billion-revenue business spanning new chemicals to fertilizers to farm chemicals to even noodle-chain shops.
In 2007 ChemChina rose to the spotlight of China's vast refining business after it acquired a few local oil processors in eastern Shandong province to claim a total of 600,000 barrels per day refining capacity, the country's No.4 by size.
But throughput at its 12 refineries was a tiny 10,000 bpd last year, as Beijing limited crude oil access to its top oil firms Sinopec Corp, PetroChina and CNOOC Ltd, and ChemChina had to import fuel oil -- now subject to a steep consumption tax -- to make chemicals like propylene and ethylene.
Oil refining is not our goal, to secure feedstock for chemicals is, Ren said, adding that ChemChina had invested heavily on these Shandong plants with technologies like deep catalytic cracking to boost products values.
We live on the margins ... We have to differentiate ourselves in the strength of technologies, said Ren.
In refining, we won't give up our existing plants, we want to seek strategic cooperation, such as 50-50 joint venture with firms that have oil resources or management expertise, said Ren, warning that it's no easy job to court such investors given Beijing's tight grip on crude supply.
(Reporting by Chen Aizhu and Jim Bai; Editing by Jonathan Leff)