China's Sinochem hires sponsors for $2 billion IPO of oil assets - sources

By Matthew Miller and Julie Zhu

BEIJING/HONG KONG (Reuters) - China's Sinochem Group has chosen BOC International, CLSA and Morgan Stanley as joint sponsors for the Hong Kong stock listing of its key oil assets that is expected to raise about $2 billion, three people with direct knowledge of the matter said.

Sinochem has also picked China International Capital Corp (CICC), HSBC, ICBC International and JPMorgan to work on the initial public offering (IPO) expected in the second half of this year, said the people.

The planned IPO for the state-owned group's unit will likely include its oil refining, oil trading, storage and logistics, as well as distribution and retail businesses, but not its struggling upstream business - mostly overseas oil and gas production.

JPMorgan declined to comment. Sinochem and all the other investment banks did not immediately respond to a request for comment. The people declined to be named as the deal details are not public yet.

The proposed float comes amid a push by Beijing to inject new life into bloated state-owned enterprises by encouraging private capital investment in the enterprises.

Beijing has been working towards creating bigger, stronger state firms, and building enterprises capable of competing globally. It is also weeding out excessive capacity in bloated sectors, but wants to avoid any risk of mass layoffs or a blow to economic growth.

Sinochem's IPO plans have been pushed ahead by chairman Frank Ning, who joined the firm in early 2016 from food group COFCO, where he was well known for aggressive restructuring and M&A, Reuters reported in October.

Under his leadership, several Sinochem units have been given more leeway in their expansion plans and more support for tapping capital markets for fundraising.

Beijing-based Sinochem controls the 240,000 barrel-per-day Quanzhou refinery in the coastal province of Fujian, a major source of group profits in the past two years. Sinochem has said it wants to boost investment at the refinery to diversify into petrochemicals.

It also runs nearly 10 crude and oil products terminals, and more than 700 retail stations across China, its website showed.

The group's annual turnover of crude and products is about 150 million tonnes, while the combined annual capacity of its three refineries is nearly 25 million tonnes.

(Reporting by Matthew Miller in Beijing and Julie Zhu in Hong Kong; Additional reporting by Aizhu Chen in Beijing; Editing by Muralikumar Anantharaman)