Swiss agricultural company Syngenta Group has announced that its planned initial public offering (IPO) on Shanghai's main market will be postponed due to current unfavorable market conditions. This is the latest setback in the company's efforts to launch a blockbuster IPO.
Acquired by Chinese state-owned firm ChemChina for $43 billion in 2017, Syngenta has been working towards an IPO since 2021. The company aims to raise 65 billion Chinese yuan ($8.93 billion), which would have made it the largest IPO worldwide this year according to Dealogic data.
"We anticipate that the IPO will take place by the end of next year, given the current weak market conditions," explained a Syngenta spokesperson. "We also remain open to alternative methods of expanding our shareholder base and will adopt a flexible approach."
However, a source close to Syngenta told The Wall Street Journal that the plan to list next year is contingent upon market conditions improving, and an exact timeline cannot be determined at this time. While an IPO is still the preferred option, a private placement could be considered if capital markets remain subdued, particularly in China.
In a previous announcement made in May, Syngenta had withdrawn its application to list on China's Nasdaq-style STAR Market, opting instead for a flotation on the main market of the Shanghai Stock Exchange.
Syngenta Announces Executive Reshuffle
Syngenta recently revealed its plans to restructure its leadership team, appointing Jeff Rowe as the new Chief Executive Officer (CEO) starting in January. Additionally, Hengde Qin will assume the role of Chief Financial Officer (CFO) from December. The current head of Syngenta's crop-protection business, Rowe will take over from Erik Fyrwald, who has served as CEO since June 2016. These changes are set to occur before the ChemChina takeover.
Challenging Quarter for Syngenta
As Syngenta announced a delay in its initial public offering (IPO), the company also reported declines in earnings and revenue for the third quarter. This year's results were notably weaker compared to the previous year, primarily due to a more challenging market in Brazil and industry-wide inventory reductions.
During the third quarter, Syngenta saw a significant decrease in earnings before interest, taxes, depreciation and amortization (EBITDA), which dropped by 68% to $300 million. Furthermore, sales for the quarter fell by 13% to $6.8 billion.
A Year of Inventory Reductions Syngenta's results have been impacted by customers' efforts to reduce inventories following supply-chain issues last year. Distributors and retailers had stocked up, leading to lower demand this year as inventory levels were brought back to normal.
Industry-Wide Impact Syngenta is not alone in facing challenges this quarter. U.S. peer Corteva also reported lower sales, while German group Bayer experienced a revenue decline in its crop-science division.