Jim Ratcliffe’s Ineos takes €200mn punt on chemical sector peers
Group invests in basket of company equities and tells bondholders the sector is ‘undervalued’
Sir Jim Ratcliffe’s chemicals conglomerate Ineos has amassed a €200mn bet on the share price of other chemical companies, backing their view that the ailing sector is undervalued.
The unusual move marks a defiant gesture for a private company that has seen its own bonds targeted over the past 12 months by a number of large hedge funds, as the sector has come under fire.
Ratcliffe, who co-owns football club Manchester United, built Ineos by making a number of bold acquisitions in unloved sectors and has been a forceful proponent of the European chemical industry, despite its waning profitability in recent years.
“The ultimate shareholders of the Group believe that chemical producers are currently undervalued,” Ineos said in private bond offering documents shared with investors as part of a €700mn debt issuance earlier this month.
“As such, the Group has invested approximately €200 million in an exposure to a basket of publicly traded liquid equities related to the chemical industry,” it said, adding that it may increase its exposure to those equities and could purchase shares in other companies related to the sector.
Europe’s chemicals producers have struggled in recent years with a deluge of cut-price imports from China, high energy prices and tougher environmental regulations, on top of overcapacity and weak demand across the globe.
Ineos declined to comment further, saying “the disclosures in the offering memorandum speak for themselves”.
The bond prospectus suggests it is a straight financial investment, however, rather than an attempt to take control of other companies, with Ineos saying it “is likely to be unwound during 2026” though it could not guarantee the timing of any sale or that “the value of this investment will not decline”.
The US and Israel’s war on Iran has been a source of reprieve for Ineos and some of its peers, as the near closure of the Strait of Hormuz has cut supply from Asia and the Middle East, increasing prices of chemical products and margins.
Founded in 1998, Ineos has borrowed heavily for over two decades to become one of the world’s biggest chemicals companies through a series of acquisitions. A prolific user of European high-yield debt markets, the group’s bonds plunged over the past 12 months amid wider trouble in the chemicals sector and concern over the company’s leverage.
The price of its debt has recovered following the war on Iran, with billions of euros worth of debt that had fallen to prices as low as 80 cents on the euro before the war returning to close to par.
A number of large hedge funds in the US and Europe built up short positions against the sector’s constituents in the past year, betting that the weaker companies may come under financial strain or collapse.
In an investor letter sent in January, US hedge fund Diameter, which oversees $25bn in assets, said that it had “success in the fourth quarter in shorts of global chemicals companies bedevilled not so much by sudden drops in demand (RECESSION!) than by the evolution of supply.
“The problem is China, which seems determined to add capacity up and down the chemicals chain,” it said, adding: “We have shorts in the most impacted names and believe that 2026 will be a watershed inflection for chemicals.”
Ineos has not disclosed the particular companies it has bought into but the wider sector performance in 2026 suggested the bet will have done well so far. The share price of BASF, the German-headquartered chemical group, has risen by about a fifth so far this year. Evonik, a specialist chemical company, is up by almost a third, while the Stoxx Europe 600 Chemicals index has risen 8 per cent since January.