Sir Jim Ratcliffe’s chemicals conglomerate Ineos and its shareholders have doubled down on listed shares in European chemical companies, signalling their view that the sector was undervalued. Ineos Quattro, one of two holding groups the privately held chemicals giant uses to issue debt, told investors it had placed its own €200mn bet on selected chemical companies. The three shareholders of Ineos also made a similar investment, though they did not disclose the size. Together with the €200mn purchase disclosed in May of a “basket of publicly traded liquid equities related to the chemical industry”, Ineos and its shareholders have invested more than €400mn in its chemicals sector peers.

The share purchases have drawn criticism from some Ineos creditors who question why cash was not used to buy back debt, especially as some of the group’s bonds trade at a discount. Ineos owes investors approximately $19bn. One credit investor holding Ineos’s debt said the market was frustrated they didn’t buy back bonds, adding that it suggests “both management and the shareholders are finally seeing recovery in a market that has been in a four‑year downturn**.

Jim Ratcliffe, who co‑owns football club Manchester United, has been a forceful proponent of the European chemical industry despite its waning profitability in recent years. He built Ineos through bold acquisitions in unloved sectors. The recent US and Israel actions against Iran have curtailed supply from Asia and the Middle East, lifting chemical product prices and margins, providing a reprieve for Ineos and peers.

In private bond offering documents shared with investors in May, Ineos stated that chemical producers are currently undervalued, citing a strong balance sheet, substantial liquidity and a disciplined approach to capital allocation. The group said it had invested approximately €200mn in an exposure to a basket of publicly traded liquid equities related to the chemical industry and may increase that exposure or purchase shares in other sector companies.