June 16, 2017 / 8:36 AM / a month ago

Malaysia's Lotte Chemical Titan counts PNB, Eastspring as IPO cornerstone investors

3 Min Read

KUALA LUMPUR, June 16 (Reuters) - Malaysia's Lotte Chemical Titan Holding Sdn Bhd, en route to a $1.4 billion initial public offering (IPO) in July, on Friday said it has drawn five cornerstone investors including Permodalan Nasional Bhd (PNB) and Eastspring Investments Bhd.

The firm, wholly owned by South Korea's Lotte Chemical Corp , at its IPO prospectus launch said the other backers were Great Eastern Life Assurance Malaysia Bhd, Maybank Asset Management Sdn Bhd and Maybank Islamic Asset Management Sdn Bhd.

Those investors will buy 18.4 percent of shares offered in an initial public offering (IPO), or about 5.5 percent of the firm's enlarged issued share capital, Lotte Chemical Titan said.

The integrated petrochemical producer plans to sell 740.4 million shares, or 30 percent of enlarged capital, in Bursa Malaysia's biggest IPO in over two years as improving commodity prices and upbeat economic growth stimulate appetite for deals.

Power producer Malakoff Corp Bhd raised 2.74 billion ringgit ($642 million) in May 2015.

With the ceiling IPO price set at 8 ringgit a share, Lotte Chemical Titan could raise as much as $1.4 billion. IFR, a Thomson Reuters publication, on Friday reported the firm is likely to set a price of 7.80 ringgit to 8 ringgit.

Lotte Chemical Titan Chairman Abdul Rahman Mamat, announcing the IPO prospectus, said the firm has been spending to increase production capacity for long-term growth.

"Improvements in our operations and profitability are demonstrated in the 131 percent compound annual growth rate in our earnings before interest, tax, depreciation and amortisation from 2014 to 2016," he said.

The firm, which earns 70 percent of revenue at home and in Indonesia, will use the IPO proceeds to build a naphtha cracker plant in its southern neighbour.

Its IPO prospectus showed net profit more than doubled to 1.32 billion ringgit in 2016, on revenue that fell 1 percent from a year prior to 8.14 billion ringgit.

Also, Lotte Chemical Titan's 2009 annual report showed state-linked asset manager PNB, one of its cornerstone investors, owned 5.58 percent of its shares before Lotte Chemical's 2010 acquisition.

Lotte Chemical Titan originally planned the IPO for last year but postponed after South Korea began investigating Lotte Group for alleged wrongdoing.

Credit Suisse, JP Morgan and Maybank are joint global coordinators for the IPO. Bookrunners are CIMB, HSBC and Nomura. ($1 = 4.2710 ringgit) (Reporting by Liz Lee; Editing by Christopher Cushing)

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