Sinopec readies record stock sale

Sinopec's stock offering will be the biggest in the 11-year history of China's markets

By CNN's Alex Frew McMillan

HONG KONG, China -- Oil company Sinopec Corp. said Thursday it would raise $1.43 billion, or 11.8 billion yuan, selling stock in mainland China.

That makes it the largest initial public offering in China's history.

Sinopec is selling 2.8 billion A shares, which it priced Thursday at 4.22 yuan, or 51 cents. That's toward the high end of its range.

It had originally said it would sell the shares between 47 and 52 cents.

Sinopec -- full name China Petroleum & Chemical Corp. -- is the second-biggest oil company in China. The state-owned company first sold stock to the public in October 2000, trading in Hong Kong, New York and London.

But Beijing-based Sinopec has so far been off-limits to Chinese investors. Its A shares will trade in Shanghai.

Record may not stand for long

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The company says it will use 6.4 billion yuan of the proceeds to buy exploration company Sinopec National Star from its parent. It will also use the IPO money to fund two pipelines it is building.

Institutional investors have had a week to express their interest. Man-on-the-street retail investors will be able to buy in for the first time starting Monday.

Demand was expected to be strong because the shares will be relatively cheap compared to other A shares. China International Capital Corp. is underwriting the offering.

Sinopec may not hold the record for long. Rival PetroChina is also planning a mainland offering that will likely be bigger, though it hasn't pinned down the details.

The largest Chinese companies used to look abroad to raise money. But they are keen to sell stock in China, now rules have been eased there and with prices relatively high.

Some investors worry the large amount of new stock will sap demand. China's markets were down after Sinopec's strong pricing.

Sinopec has fallen below its initial offering price of HK$1.61 in Hong Kong. But it was trading up 2.0 percent at HK$1.51 early Thursday afternoon.