China’s regulators bide time before reviving Syngenta’s US$9.4 billion IPO amid fears of liquidity shortage, sources say

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by Zhang Shidong at scmp.com

China’s regulators are in no rush to let Syngenta Group’s blockbuster US$9.4 billion initial public offering (IPO) move ahead, as they aim to cut fundraising into bite-size chunks that the mainland market can swallow amid a surge in new share offerings under more liberal listing rules, according to sources.

The Shanghai Stock Exchange will not restart a cancelled hearing to vet the agrichemical giant’s share sale any time soon, because it is not a good time to kick off the deal, according to these sources, who spoke on condition of anonymity.

“Syngenta is too big for the market to take now, given that most of the recent IPOs are smaller companies valued at an average of 600 million yuan,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. “It would divert at least hundreds of billions of yuan from the market.”

Syngenta’s IPO, if it proceeds, is set to be the world’s largest flotation this year and China’s second-largest ever, after Agricultural Bank of China’s US$10 billion offering in 2010.

Soybeans from Syngenta Group seeds are harvested near Princeton, Illinois, U.S., in 2016. Photo: Bloomberg

Soybeans from Syngenta Group seeds are harvested near Princeton, Illinois, U.S., in 2016. Photo: Bloomberg

China’s regulators are in no rush to let Syngenta Group’s blockbuster US$9.4 billion initial public offering (IPO) move ahead, as they aim to cut fundraising into bite-size chunks that the mainland market can swallow amid a surge in new share offerings under more liberal listing rules, according to sources.

The Shanghai Stock Exchange will not restart a cancelled hearing to vet the agrichemical giant’s share sale any time soon, because it is not a good time to kick off the deal, according to these sources, who spoke on condition of anonymity.

“Syngenta is too big for the market to take now, given that most of the recent IPOs are smaller companies valued at an average of 600 million yuan,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. “It would divert at least hundreds of billions of yuan from the market.”

Syngenta’s IPO, if it proceeds, is set to be the world’s largest flotation this year and China’s second-largest ever, after Agricultural Bank of China’s US$10 billion offering in 2010.

A man walks in front of the Shanghai Stock Exchange Building, in Shanghai on April 3, 2023. Photo: EPA-EFE

A man walks in front of the Shanghai Stock Exchange Building, in Shanghai on April 3, 2023. Photo: EPA-EFE

Basel-based Syngenta has no fundamental problems that would disqualify the listing, and the current top priority of Chinese regulators is to ensure the smooth implementation of the new registration-based system that has been applied to all IPO issuers since February, said one source.

The Shanghai exchange’s abrupt scrapping of a March 29 listing meeting that was supposed to review the stock sale caught investors off guard, marking the biggest back-pedal by the bourse since it scuttled Ant Group’s US$40 billion offering in November 2020.

Syngenta did not reply to a request for comment, and the Shanghai exchange declined to comment.

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