Chem China setting up $5-B fund to help finance Syngenta bid

HONG KONG — China National Chemical Corp. (Chemchina) is setting up a fund that will aim to raise $5 billion to help finance its purchase of Swiss seeds group Syngenta, two sources with direct knowledge of the matter told Thomson Reuters publication Basis Point.

The financing structure entails investors committing to the fund, which would in turn own equity in Syngenta, the people said — a move that would help Chemchina lower the debt burden of its planned $43-billion acquisition.

Overall, Chemchina is targeting about $ 25 billion in equity commitments to help fund the largest ever foreign purchase by a Chinese firm, the people added.

Sources have previously said it has $32.9 billion in total debt commitments arranged with Chinese and international lenders. That level of gearing is, however, viewed as too high for comfort by lenders, investors and analysts alike.

Chemchina has hired staterun Postal Savings Bank of China (PSBC) to arrange the fund, the people added. The mandate is a coup for the bank as it only set up its investment banking department about a year ago.

The sources declined to be identified as the discussions are confidential. Representatives for Chemchina did not respond to telephone and e-mailed requests for comment. PSBC declined to comment.

In addition to the planned fund, Chemchina has secured $5 billion in equity from Feng Xin Jian Da LP, a fund managed by CITIC Trust Co. Ltd, a unit of conglomerate CITIC Ltd, sources have previously said.

It was not immediately clear in what other ways Chemchina aims to boost the equity financing portion of the deal. —