On 15 Jan., 2016, CEFC
Anhui International Holding Co., Ltd. (CEFC International) announced that CEFC
Shanghai International Group Limited (CEFC Shanghai), its controlling
shareholder, was preparing for a capital injection. This means that CEFC
Shanghai will get listed after injecting capital into CEFC International, which
is currently listed. CEFC Shanghai already owns CEFC International and the
capital injection will help CEFC Shanghai and CEFC International to meet the
standards to complete a back-door listing.
Also
CEFC International, which has been dominant in China's agrochemical stock
market, will restructure and will exit the agrochemical business in 2016.
As of
2015, CEFC International’s income mainly came from chemical raw materials and
chemical manufacturing, and trading agricultural materials. However, in Oct.
2015, CEFC International disclosed that its agrochemical business and
agricultural materials trade will be sold. Related assets and liabilities will
be transferred to CEFC Anhui International Holding Co., Ltd. (Huaxing
Chemical), CEFC International’s wholly-owned company.
Also,
CEFC International plans to settle and sell the claims and debts of Huaxing
Chemical. After integrating the above assets, CEFC International will sell its
agrochemical subsidiaries to CEFC Petroleum (Guangdong) Co., Ltd. (CEFC
Guangdong).
Huaxing
Chemical, which will take over CEFC International's agrochemicals business,
cannot access capital from the financial markets. Will it embrace better
development in the future with CEFC Guangdong as its planner? In particular,
with the stagnant current pesticide market, what kind of future role will the
agrochemical business of Huaxing Chemical play in the agrochemical industry?
CEFC
Shanghai, a controlling shareholder of CEFC International, is planning to
transfer its main energy and financial businesses assets to CEFC International.
This is essential for CEFC International to realize its development strategy of
combining energy with finance.
CEFC
International will issue stocks to raise USD2.31 billion-USD3.08 billion (RMB15
billion-RMB20 billion) and to purchase assets. The annual profit of the assets
is USD231 million-USD308 million (RMB1.5 billion-RMB2 billion) and due to their
promising growth, the assets are worth about USD3.54 billion-USD4.61 billion
(RMB23 billion-RMB30 billion) in a preliminary estimate. The supporting finance
will be used for trading energy and for constructing bases to reserve oil.
CEFC
International has been suspended since the market opened on 15 Jan., 2016
because of uncertainties over issues related to its development strategy and
plans. The company has promised that it will resume trading within three months
and will strive to release its plan regarding its major asset reorganization by
15 April, 2016.
In May
2013, CEFC Shanghai officially became the shareholder of CEFC International. In
Dec. 2014, Anhui Huaxing Chemical Industry Co., Ltd. was renamed as CEFC Anhui
International Holding Co., Ltd.
With
the entry of CEFC Shanghai, CEFC International changed its future development
strategy. CEFC International is focusing on energy and is striving to become a
major global player. CEFC International will increase its investments in oil
and gas from Central and Western Asia, Central and Western Europe and Africa,
aiming to directly control the upstream resource of oil and gas.
CEFC
International will also establish a huge downstream network for energy
consumption in Asia and Europe, attempting to control the demand for energy
consumption and to enhance its bargaining ability. CEFC International will
still offer different financial services and to shape itself as a multinational
in the energy and finance industries with control over oil fields, oil
refineries, gas stations, strategic reserve pools, trades, transportation,
securities, bank, futures, factoring, lease and trading centers.
This article comes from Herbicides China News 1601, CCM
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