Syngenta Group withdrew its long-delayed application for a $9 billion initial public offering in Shanghai, another blow to China’s equity markets after Alibaba Group Holding Ltd. this week scrapped the listing of its logistics arm.
The Chinese-owned seed and pesticide giant “will look to restart the listing process, either in China or a different global exchange, when the conditions are right,” Syngenta said Friday in a statement on its website. “It will also explore alternate sources of funding.”
Syngenta Group, the Swiss agrichemicals and seeds giant, has decided to withdraw its long-delayed application for a $9 billion initial public offering (IPO) in Shanghai. This move comes after a three-year wait and adds to the challenges faced by China’s equity markets. Let’s delve into the details of this decision and its implications.
The Withdrawal
Syngenta’s IPO journey has been marked by twists and turns. Here are the key points:
Initial Application: Syngenta first filed for an IPO in China’s financial hub back in 2021. The company aimed to raise a substantial 65 billion yuan ($9 billion) through the listing.
Snags and Delays: However, the listing process encountered several hurdles. The most recent delay occurred in November, when Syngenta announced that it would postpone the offering until the end of 2024 due to volatile markets.
Market Conditions: The decision to withdraw the IPO application reflects the challenging environment for Chinese equities. The economy grapples with a long-running real estate crisis, deflationary pressures, and geopolitical tensions. The benchmark CSI 300 Index touched a five-year low in early February, and it remains down 39% from its peak in 2021. In contrast, US and European stocks continue to reach record highs.
Alternate Funding Sources: Syngenta remains resilient. The company stated that it will explore alternate sources of funding. While the IPO in Shanghai is off the table for now, Syngenta may consider listing on a different global exchange when the conditions are right.
BEIJING (Reuters) – Swiss agrichemicals and seeds group Syngenta on Friday withdrew its bid for a multi-billion dollar listing on the Shanghai Stock Exchange during a recent period of weakness in the Chinese equity market.
The initial public offering (IPO), which would have valued the Chinese-owned firm at as much as $60 billion, has been postponed repeatedly since being proposed in 2021 due to unfavourable market conditions.
“After careful consideration of industry environment and the company’s own development strategy, Syngenta Group has decided to withdraw its application for IPO on the main board of the Shanghai Stock Exchange,” the company said on Friday.
The flotation had, like other recent deals, come unstuck due to a lull on the Chinese market, according to a person familiar with the matter, who spoke on condition of anonymity.
Syngenta spokesman Saswato Das declined to give further details on why the company had stepped back from the IPO.
Syngenta said it will look to restart the listing process either in China or on a different exchange, when conditions are right, as well as explore alternative sources of funding.
Market analysts have previously cited Hong Kong, Zurich and London as potential alternatives for a Syngenta listing.
The sudden chill in China’s IPO market, which was the world’s biggest in 2022 and 2023, comes after the securities watchdog, under new chairman Wu Qing, vowed to step up scrutiny of listing candidates and crack down on any lapses.
During January-March 2024, money raised via China IPOs plunged two-thirds from a year earlier to just $2.4 billion, the smallest quarterly fundraising since the last quarter of 2018, and down 82% from a year earlier, preliminary LSEG data showed.
Executives of the company owned by Sinochem said as recently as last November that Syngenta planned to list in 2024. The partial floatation was expected to raise around $10 billion.
The Shanghai Exchange said in a filing that the bourse had terminated its review of Syngenta’s IPO application after the company applied to withdraw it.
Weak demand in key markets such as Brazil has put pressure on the company’s earnings.
Sales at the Basel-based company dipped last year by 4% to $32.2 billion from $33.4 billion in 2022, while earnings before interest, tax, depreciation and amortisation fell by 18% to $4.6 billion, Syngenta said later on Friday.
Broader Implications
Syngenta’s withdrawal is not an isolated incident. It echoes Alibaba Group Holding Ltd.’s recent decision to scrap the listing of its logistics arm. The Chinese equity market faces headwinds, and companies are carefully evaluating their listing plans.
Meanwhile, equity capital markets elsewhere are showing signs of revival. Social media company Reddit Inc. recently listed in the US, and skin-care company Galderma Group AG went public in Switzerland. These developments highlight the contrasting fortunes of global markets.
Conclusion
Syngenta’s decision to pull its China IPO application underscores the complexities of navigating the financial landscape in a dynamic global economy. As the company explores alternative funding avenues, investors and market watchers will closely monitor its next moves. The saga continues, and the wait for Syngenta’s listing may extend further. Stay tuned for further updates.
