SINOPEC Engineering to acquire EPC firms in Asia and Europe
SINOPEC Engineering (Group) (SEG) [HKG:2386], China’s state-owned refining and chemical engineering service provider, is scouting for targets of engineering, procurement and construction (EPC) peers in Asia and Europe, people familiar with the situation said.
SEG's spokesperson confirmed that such plans remain under the company's preliminary and internal discussions, but declined to specify details.
Such acquisitions would help facilitate the company to tap into the European refining engineering market, and to shore up its market presence in Central Asia, the Middle East and Southeast Asia, amid China’s efforts to implement its One Belt One Road initiative, the first person explained.
SEG has especially kept an eye on Indonesia, Thailand, Malaysia, India, and Kazakhstan, where the company has signed several engineering projects, and will sign more over the next few years, the first person added. SEG had acquired a local ECP firm in Saudi Arabia last year, where majority of its overseas engineering projects are located, he said.
The Beijing-based company will invest between USD 10m and USD 1bn in each acquisition target, which is subject to change pending the target’s EPC capabilities and client bases, the two people said.
Financial advisor for the Saudi Arabia acquisition was PwC and auditor was EY, the first person said. It will most likely hire them when identifying the next potential targets, he added.
SEG’s acquisition talks with potential targets in Germany and Italy collapsed between late last year and early this year due to difference in takeover prices, but it will keep hunting for targets in Europe though priority will be given to Asia, the second person said.
The HKD 29.5bn (USD 3.8bn) market cap company reported revenue of CNY 20bn (USD 3.1bn) and gross profit of CNY 3bn in 1H15, down 7.7% and 0.3% year on year.
SEG is controlled by China’s state-owned China Petrochemical Corporation (SINOPEC).