Syngenta IPO buzz creates grain security talk among analysts

Global seed and crop giant Syngenta Group's selection of Shanghai's Nasdaq-style STAR Market for its proposed mega IPO will likely accelerate the use of the company's technologies in China's agricultural sector and further consolidate the nation's grain security, analysts said on Monday.

Their remarks followed foreign media reports that Syngenta, a subsidiary of State-owned Sinochem Holdings Corp Ltd, is preparing to make its IPO in Shanghai before the end of this year. If the plan goes through, it could create one of the world's biggest listings of the year.

According to the prospectus disclosed by the Basel, Switzerland-based group last year, Syngenta plans to raise 65 billion yuan ($9.7 billion) by listing on the Shanghai Stock Exchange's STAR Market. If the proposal pans out, it will be the largest A-share IPO of the last decade.

According to the prospectus, IPO proceeds will be invested in five areas, including research and development of cutting-edge agricultural technologies, the expansion and upgrade of production assets and growth of the Modern Agricultural Platform (MAP).

Syngenta submitted its IPO application to the Shanghai bourse in July 2021. To date, it has completed three rounds of inquiries from the SSE. Its IPO application is in a normal review state.

"With many countries such as Egypt, Algeria and Indonesia taking measures to import more grains to mitigate the impact of the Russia-Ukraine conflict, and prices of many agricultural products soaring this year, the company's planned IPO will strengthen both the company and China as Syngenta will be able to ensure efficiency in farming as well as adequate grain reserves amid a challenging global environment," said Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing.

"Food security can only be guaranteed by sufficient arable land and modern agricultural technologies," said Zhao Jiuran, director of the Corn Research Center, which is part of the Beijing Academy of Agriculture and Forest.

As global food and farm sectors face uncertainty over crop yields and trade flows due to the climate change, the COVID-19 pandemic and supply chain challenges, the understanding of policymakers and consumers across the world about food security has deepened unprecedentedly, Zhao said.

Syngenta was bought by erstwhile State-owned China National Chemical Corp Ltd, also known as ChemChina, for $43 billion in 2017.

In 2020, it was restructured as an entity with four business units: Syngenta Crop Protection, Syngenta Seeds, Syngenta Group China and Adama, an Israel-based crop protection solutions provider.

In May 2021, in an unrelated development, the government approved the restructuring and merger of ChemChina and Sinochem Group Co Ltd to form the behemoth Sinochem Holdings Corp Ltd. Thus, Syngenta became a subsidiary of Sinochem Holdings.

In mid-June, it appointed Yang Lin, former chief financial officer of Sinochem Holdings, as its chief accounting officer.

"Yang has extensive experience in China's capital markets and has a wealth of knowledge on listed companies in China. This appointment will be beneficial to Syngenta Group as the company prepares for its IPO on Shanghai's STAR Market," said Erik Fyrwald, the group's CEO, in a statement.

Fueled by demand for products and services to help farmers increase crop yields, Syngenta's sales revenue surged 23 percent year-on-year to $28.2 billion in 2021.