Lotte Chemical Titan Holding Berhads, Malaysian subsidiary of South Korean petrochemical company Lotte Chemical Corp., raised 3.77 billion ringgit ($878.2 million) in its initial public offering, marking its comeback to the main Malaysian stock exchange under the Korean ownership in the biggest Malaysian IPO in five years.

The IPO was set at 6.5 ringgit ($1.51) apiece, the bottom of the guidance range due to tepid book-building response that led to cut in the IPO scale by a fifth to 580 million from original 740.5 million.

As of 12:30 p.m., shares of Lotte Chemical Titan slipped from their debut opening to 6.38 ringgit.

Malaysia’s top petrochemical maker has returned to the Bursa Malaysia’s Main Market it left after a 72 percent equity stake sale to its Korean rival (then Honam Petrochemical) at $1.27 billion in June 2010. The remaining 28 percent was also bought by Lotte Group through the stock market later in the year.

Lotte’s shareholding was reduced to 70 percent after the new stock issues. The company has a market value of around 15 billion ringgit when 580 million new shares are added to the issued base of 2.31 billion shares, ranking in the top 30 stocks on the Malaysian main bourse.

The bulk of the IPO proceeds would go to an integrated facility in Indonesia whose construction would start next year. The remainder would be used to build a polypropylene plant in southern Malaysian state of Johor and upgrade naphtha cracker.

The company has a capacity of producing 720,000 tons of ethylene, 1.01 million tons of polyethylene, and 440,000 tons of polypropylene annually from its manufacturing bases in Malaysia and Indonesia. It registered an operating profit of 505.9 billion won on sales of 2.3 trillion won last year.

The Malaysian subsidiary contributed 20 percent to Lotte Chemical’s total operating profit and 21 percent of total net income last year.

By Moon Ji-woong

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