A logo of Sinochem is seen outside an office building of Sinochem in Beijing, China, February 21, 2017. REUTERS/Damir Sagolj

BEIJING (Reuters) - Sinochem Energy, a unit of China’s Sinochem Group, has agreed to sell a 20% stake to five state-owned firms for 11.56 billion yuan ($1.65 billion), Xinhua news agency reported.

The strategic investors included financial investment arms of Agricultural Bank of China 601288.SS1288.HK and Industrial Bank of China (ICBC) 601398.SS1398.HK, and Citic Securities Investment Co, the official news agency said late on Friday.

Sinochem Energy operates the group’s oil and petroleum products trading, refining, storage and logistics, as well as distribution and retail businesses, but not its struggling upstream business that includes overseas oil and gas production.

China National Chemical Corp, or ChemChina, has also approached Chinese state-backed investors for up to $10 billion in funding as part of a reorganization of its agrichemicals business ahead of a public float, sources have said.

The fundraising efforts and eventual stock market listing are designed to cut ChemChina’s debts ahead of a long-awaited mega-merger with state-owned peer Sinochem.

Frank Ning Gao Ning, the chairman of both companies, has encouraged individual business units to tap capital markets ahead of any tie-up, which has been in the works since 2016.