Lotte Chemical Titan secures five cornerstone investors for IPO

KUALA LUMPUR: Lotte Chemical Titan Holdings Bhd, the biggest initial public offering (IPO) in Malaysia since 2012, has garnered five cornerstone investors, which have agreed to acquire 136 million shares, representing 18.4% of the IPO’s base offering.
These cornerstone investors are Permodalan Nasional Bhd, Mayabank Asset Management Sdn Bhd, Maybank Islamic Asset Management Sdn Bhd, Eastspring Investments Bhd and Great Eastern Life Assurance (Malaysia) Bhd.
With a retail issue share price of RM8 per share, Lotte, scheduled to be listed on the Main Market of Bursa Malaysia on July 11, is expected to raise RM5.9 billion from its IPO. Post-listing, Lotte’s market capitalisation will be RM19.7 billion.
This marks the group’s comeback to the stock market after it went private six years ago in a US$1.25 billion deal.
Lotte’s IPO entails an institutional offering of 684.7 million shares to Malaysian and foreign institutional as well as selected investors, while its retail offering of 55.78 million shares will be made available to its directors, eligible employees and the Malaysian public.
Upon listing, Lotte’s South Korea-based parent company Lotte Chemical Corp will see its shareholding reduced to 70%.
Lotte has earmarked more than 80% or RM4.9 billion of the proceeds raised for the construction of an integrated petrochemical facility in Banten Province, Indonesia.
Speaking of listing on the local bourse while channelling the proceeds beyond Malaysian shores, Lotte senior vice-president Philip Kong said it will only be right for this Malaysian firm “to be listed here”.
“The reason why we are expanding in Indonesia is because they are a huge importer of polyolefins and the market is huge there. It will contribute significantly to the success of Lotte going forward,” he told reporters after the group’s prospectus launch here last Friday.
Lotte CFO David Tan said the listing exercise will help maintain the group’s strong balance sheet with a zero gearing. It has net cash of RM400 million in hand.
Established in 1991, Lotte is the fourth largest producer of polyolefin products in Southeast Asia by capacity in 2016. It produces polyolefins, comprising polyethylene and polypropylene and olefins, comprising ethylene and derivatives such as butadiene, tert-butyl alcohol, benzene and toluene.
Currently the group has three polyethylene plants in Indonesia with a capacity of 450 kilotonnes per annum (kta).
Kong said the RM15.5 billion facility in Indonesia, which will take up 83.1% of the IPO proceeds, is scheduled for construction some time in 2018 or 2019 and completed by 2023. The group is conducting a feasibility study for the project.
The remaining RM1 billion will be used to build a polypropylene plant to create an additional 200kta supply of polypropylene in Johor and to upgrade its existing naphtha cracker plant.
Lotte’s Malaysian and Indonesian markets make up 70% of its overall business, while it also sells to other Southeast Asian countries and China.
With the completion of the Indonesian project, it aims to become the number one petrochemical company in the region and overtake the likes of Siam Cement, PTP Global and ExxonMobil.