CNPC’s Backdoor Listing Target Jinan Diesel to Raise $3 Billion

China National Petroleum Corp.’s latest backdoor-listing target announced details of a share sale to raise as much as 20 billion yuan ($3 billion) as part of a plan to take on financial business assets from the sprawling state-owned energy giant.

Jinan Diesel Engine Co. will raise the funds from up to 10 investors, with part of the proceeds being used to fund the deal, the company said in a stock exchange filing on Monday. The Shenzhen-listed company plans to buy a CNPC unit that owns 77.1 percent stake in Bank of Kunlun, 60 percent of Kunlun Financial Leasing and 82.2 percent of Kunlun Trust, it said in the statement.

Jinan Diesel will buy assets from CNPC worth about 70 billion to 80 billion yuan, according to the statement. The company plans to issue new shares to CNPC, as well as use part of the 20 billion yuan placement to pay for the remainder of the deal.

Chinese financial news magazine Caixin reported on its website earlier Monday that the company will sell shares at 9.88 yuan each to pay for the CNPC unit, without saying where it got the information. Jinan Diesel will also sell shares at 10.81 yuan each in a private placement to increase capital in the three Kunlun entities, it reported.

The Jinan Diesel plan is CNPC’s second backdoor listing announced this year. Xinjiang Dushanzi Tianli High & New Tech Co. reached a preliminary agreement with CNPC to buy engineering assets including China Petroleum Engineering & Construction Corp. and China HuanQiu Contracting & Engineering Corp., according to a statement in May.

— With assistance by Stephen Tan

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