Noble Group Ltd (來寶集團) shares surged the most in more than a year after it said it was in discussions with a strategic investor, which people familiar with the talks identified as China’s Sinochem Group (中國中化集團).
Noble shares rose as much as 17 percent in Singapore, its biggest gain since October 2015.
The company is discussing a strategic investment, according to a statement yesterday that did not refer to Sinochem.
Any tie-up would deepen Noble’s relationship with the world’s biggest consumer of resources. China Investment Corp (中國投資), the nation’s sovereign wealth fund, is already one of Noble’s largest shareholders, while China National Cereals, Oils and Foodstuffs Corp (COFCO, 中國糧油) agreed to buy Noble’s remaining stake in its agriculture unit in 2015.
COFCO’s former chairman, Frank Ning (寧高寧), now holds the same post at Sinochem, a state-owned oil and chemicals group.
“I think it makes sense for the Chinese ‘deep-pocket buyers’ to try to take this opportunity to gain exposure to the global supply chain,” Margaret Yang (楊燕), a market analyst at CMC Markets in Singapore, said by e-mail.
Noble is “deeply trapped in both internal and external challenges,” and a Sinochem purchase “would not only alleviate its liquidity problem, but also enhance the company’s credit profile and reinstate investors’ confidence,” she said.
The conversations between Sinochem and the Hong Kong-based trading house are still at an early stage, the people familiar with the talks said on Monday.
The Chinese group is interested in the international energy trading business of Noble, which includes oil, coal and natural gas.
“No binding arrangements have as yet been entered into with respect to this possible transaction and, accordingly, there can be no assurance that this transaction will be concluded,” Noble said in its statement.
Noble chairman Richard Elman told Bloomberg last year that the company was looking for a strategic investor after it raised US$500 million in fresh equity in June.
Elman is due to stand down later this year.
Noble feels it is now in a stronger position to negotiate a deal for a strategic investor, with its equity price stabilizing and bond prices rising strongly, one of the people said.
Sinochem Group did not reply to phone calls and e-mails sent outside business hours on Monday. The talks between Sinochem and Noble were reported earlier that day by Reuters.
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