China＇s Sinopec Seeks Help With Retail Unit Sinopec Sales

China Petroleum & Chemical Corp., or Sinopec, is in talks with numerous Chinese companies, including Tencent Holdings Ltd., about either selling a stake or forming alliances in its gas station and convenience store business, as part of the state-owned oil giant's effort to reform itself.

Sinopec is seeking to sell at least a 10% stake in Sinopec Sales Co., a $56 billion business it refers to as its marketing operation, and to form marketing partnerships, people familiar with the matter said. It has already signed an agreement with Shanghai-based conglomerate Fosun Group, one of the people said.

Sinopec Sales has more than 30,000 gas stations and 23,000 convenience stores across China.

Sinopec said earlier this year that it was seeking domestic and foreign investors to help make Sinopec Sales "market-oriented" and to facilitate innovation. But people familiar with the matter said that Sinopec's plan for its marketing operation could also include alliances.

The company plans to finalize the terms of its tie-ups in coming weeks and then restructure Sinopec Sales by the end of November before preparing for an initial public offering of the unit, one of the people said. No decision has been made about where the IPO would take place.

Other companies in talks about Sinopec Sales include state-owned insurer China Life Insurance Company Ltd., ENN Energy Holdings Ltd., which distributes gas to people's homes, and private-equity firm Hopu Investment Management Co., people with direct knowledge of the matter said. Sinopec recently signed a partnership framework agreement with Fosun, one of the people said.

Sinopec declined to comment.

In China most gas stations are owned by three state companies: Sinopec, China National Petroleum Corp., China's largest oil company, and China National Offshore Oil Corp. Sinopec's efforts with Sinopec Sales are part of a broader push by the Chinese government to inject entrepreneurialism and vitality into its bulky state-owned firms.

In recent months, other Chinese state-owned companies have announced reform plans. They include conglomerate Citic Group, which has been absorbed by its Hong Kong-listed unit, giving foreign investors easy access to it. Shares listed in China are subject to quotas for foreign investors, but Hong Kong has no such limitations.

The Chinese government agency that manages state firms also announced last month that six state companies, including food trader China National Cereals, Oils and Foodstuffs Corp., or Cofco Corp., will be subject to reform.

Sinopec's returns have declined in the past seven years, as it made a big push to expand overseas. However, its shares have risen 25% since it announced in February that it would restructure Sinopec Sales by allowing for outside investment.

Sinopec Sales recorded a net profit of 25.1 billion yuan ($4 billion) in 2013. Total assets stood at 342 billion yuan as of the end of April, Sinopec said.

Sinopec could use proceeds from the divestiture to invest in businesses with higher returns, such as exploration and production, some analysts have said.

Mainland investment banks China International Capital Corp. and Citic Securities Co., as well as Deutsche Bank AG and Bank of America Corp., are managing the asset sale for Sinopec.

(online.wsj.com Edited by Topco)