BP sells stake in Sinopec
HONG KONG (Reuters) -- BP, the world's second-largest oil company, sold its stake in China's Sinopec Corp on Tuesday in a share placement worth HK$5.8 billion (US$744 million).
The British giant's disposal of its 2.1 percent Sinopec holding follows a similar move last month when BP unloaded its two percent position in China's biggest oil firm, PetroChina, for US$1.66 billion.
BP paid about $385 million for the Sinopec stake in October 2000 when the Chinese state-controlled firm listed on overseas markets. It will realize about $740 million in proceeds after fees, a market source said, generating profit of roughly $355 million.
Gary Dirks, president of BP China, said the company remained committed to its other activities with Sinopec and to investing $3 billion in China over the next five years.
"The equity investment BP made in Sinopec has been very successful and BP believes now is an appropriate time to sell the shares," he said in a statement.
The oil major said it had sold about 1.8 billion shares in Asia's largest refiner for HK$3.15 a share, at the top end of a market range.
Sinopec shares skidded 5.9 percent to close at HK$3.175 on Tuesday, just before the placement was announced. The company's shares have more than doubled over the past year.
BP's share sale will renew speculation that other global majors might look to cash in their China holdings. Mainland oil companies have reveled in higher crude prices, bolstering their share prices.
China is the world's second-largest consumer of oil, with demand fueled by its surging economy.
ExxonMobil held 3.65 percent of Sinopec as of June 30, while Royal Dutch/Shell owned 2.27 percent.
Sinopec spokesman Chen Ge said the firm had been told by both Exxon and Shell that neither had plans to unload their stakes.
He said a BP share sale had been speculated upon by the market when the British firm sold its PetroChina stake.
Tuesday's sale, he said, "removes the overhang."
Hong Kong-listed companies and their big shareholders have taken advantage of the market rally to cash out of stakes or to raise new funds.
BP's big sale of Sinopec shares is expected to drag on the Chinese firm's shares.
"There will be some pressure on the share price in the short term because there are a lot of shares available in the market. But overall, Sinopec's fundamentals are sound with its improved petrochemical operations," said Lawrence Lau, analyst at BOCI, who has an "outperform" rating on the stock.
Morgan Stanley handled the placement.
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