Chinese oil giant Sinopec will sell a 30 percent stake in its marketing arm to outside investors for more than $17 billion, the company said, as the government pushes key economic reforms.
China's Communist Party pledged at a meeting in November to allow the market to play a "decisive" role in the allocation of resources through a number of policies, including prodding state companies to operate on more commercial terms.
The move by Sinopec, initially proposed by the firm in February, has been hailed by state media as the first among the nation's three largest energy firms to introduce more diversified ownership.
However, investors were not impressed. In Shanghai, Sinopec was down 1.06 percent on Monday morning, slightly outpacing a fall in the benchmark index, while its Hong Kong-listed shares sank more than five percent.
Under the deal's terms, 25 investors will buy a combined 29.99 percent share in the marketing company, leaving Sinopec with 70.01 percent, for 107.09 billion yuan ($17.42 billion), Sinopec said late Sunday in a statement to the Hong Kong stock exchange.
The marketing unit is engaged in the distribution of petrol, diesel and jet fuel through more than 30,000 service stations, it said.
The stakeholders were mainly Chinese investment firms and insurance companies, including vehicles of Shanghai-based conglomerate Fosun, Internet giant Tencent and China Life Insurance Co., the list showed.
Foreign-linked investors include a subsidiary of ICBC Credit Suisse Asset Management Co., a joint venture between China's largest bank and the Swiss financial services giant.
No foreign oil firms were among the investors. Sinopec said previously it would not accept investors which could have a "conflict of interest" with the marketing arm or the parent company.
The official Xinhua news agency said investors included 11 privately-owned companies.
The deal still requires approval by China's Ministry of Commerce, according to the statement.
Parent Sinopec last month announced its net profit for the first half of 2014 rose 7.5 percent year-on-year to 32.54 billion yuan, despite weaker domestic demand for oil products.