APAC-focused alternative investment firm PAG has signed an agreement to acquire 51% effective interest in Handsome Chemical Group from Yip’s Chemical Holdings Limited for RMB 2,295 million (approximately $340 million).
According to an announcement, PAG will work with Yip’s Chemical and other existing shareholders to further build up the business, vertically integrating Handsome Chemical’s production of feedstock chemicals, and supporting the group’s environmentally friendly strategy through reduced greenhouse gas emissions.
Handsome Chemical, a subsidiary of Yip’s Chemical’s solvents business, is one of the leading solvents producers with an extensive distribution network in China and globally. It is the world’s largest acetate solvents manufacturer, with an annual production capacity of more than 1.6 million tonnes.
Leveraging its strategic partnership with PAG, Handsome Chemical will enter the upstream raw material market of acetic acid, and construct an acetic acid plant with an annual production capacity of 600,000 tonnes in Jingmen Chemical Recycling Industrial Park located in Hubei Province in China, at a cost of approximately RMB1,740 million.
Handsome Chemical will source carbon monoxide, one of the key feedstocks for acetic acid, from Yingde Gases, part of PAG-controlled AirPower Technologies Group, China’s largest supplier of industrial gases, which is also located in Jingmen Park.
Upon completion of the transaction, Yip’s Chemical will hold a 24% effective interest in Handsome Chemical. The proceeds will be used for Yip’s strategic investments in new materials and technology, repaying bank loans and meeting the general working capital needs of the group.
“Despite the pandemic and the increasing supply-chain challenges globally, the supply chain of the Chinese industrial sector has shown incredible resilience. The group feels more confident than ever in our future development. We believe that joining forces with PAG to advance the solvents business will create more value for its business partners and shareholders,” said Ip Chi Shing, chairman of Yip’s Chemical.
“This deal shows PAG’s ability to invest and create value in unique and industry-leading businesses by leveraging upon the capabilities of its portfolio companies,” said PAG Executive Chairman Weijian Shan.
Listed on the Hong Kong Stock Exchange, Yip’s Chemical focuses on the production and sales of petrochemical products, including solvents, coatings, inks and lubricants, with its nationwide sales network covering all major provinces and cities across China.
PAG is an investment firm focused on Asia with more than $50 billion in assets under management as of June 30 2022.
It has recently launched PAG Renewables, a wholly-owned platform that will invest over $1 billion in renewable energy in Asia over the next several years. PAG Renewables will also operate and manage PAG’s existing renewables portfolio.
Earlier in March, PAG filed for an initial public offering in Hong Kong that could reportedly raise up to $2 billion as one of the largest listings in the city this year.