DUBAI/LONDON - Saudi Basic Industries Corp (SABIC) has hired NCB Capital to advise on a potential listing of its speciality chemicals business, an offering that could raise several hundred million dollars, three sources said.
The company is also sounding out foreign banks for advisory roles and HSBC and JPMorgan are among those in the final phase of pitching for the deal, which could be launched later this year or early 2022, two of the sources said.
Saudi Arabia, which hosted Aramco's record $29.4 billion IPO in 2019, has become one of the Middle East's biggest markets for deals. The kingdom is encouraging more listings, seeking to deepen its capital markets under reforms aimed at reducing its reliance on oil.
The sources declined to be identified as the matter has not yet been made public. NCB Capital did not respond to a Reuters request for comment, while JPMorgan and HSBC declined to comment.
SABIC did not immediately respond to a Reuters request for comment. Aramco owns 70% of SABIC.
SABIC, which is valued at some $83.5 billion, does not break down earnings for its specialties business which produces speciality engineering thermoplastic resins and compounds, composites, thermosets and additives.
SABIC also owns 31.5% of Swiss speciality chemicals firm Clariant.
The COVID-19 pandemic has dented global demand for the petrochemicals industry and Fitch Ratings has said it expects only partial recovery in 2021.
Analysts said a listing of specialities business would be in line with the company's plan to restructure its business into strategic business units.
"It makes sense to focus on each business individually, especially specialities which is very different from commodity chemicals," said Yousef Husseini, equity analyst at EFG Hermes.
"The growth profiles of these businesses is different, with specialities growth potential much better than commodity chemicals, so each business needs its own capital structure/ financing plans, strategy and cash flow management."
(Reporting by Saeed Azhar, Hadeel Al Sayegh and Marwa Rashad; Additional reporting by Arno Schuetze in Frankfurt; Editing by Edwina Gibbs) ((Saeed.Azhar@thomsonreuters.com; +971 44536787; Reuters Messaging: firstname.lastname@example.org))