Lotte said to explore over US$500 million IPO for Malaysia arm

[KUALA LUMPUR] Lotte Chemical Corp, the South Korean plastics manufacturer, is exploring an initial public offering of its Malaysian petrochemicals arm that could raise more than US$500 million, people with knowledge of the matter said. The unit Lotte Chemical Titan Holding could sell shares in Kuala Lumpur as soon as the second half of this year, the people said, asking not to be identified as the information is private. Shares of Lotte Chemical Corp. jumped 4.4 per cent at 1:25 pm Wednesday in Seoul to the highest level in more than two months.

Malaysia has hosted only one IPO of more than US$500 million in the past two years, the US$885 million share sale from power producer Malakoff Corp. in April 2015, according to data compiled by Bloomberg. First-time share sales in the country raised US$1.28 billion last year, compared to US$1.25 billion in 2014, the data show.

Lotte Chemical hasn't yet decided whether to proceed with a listing of the Malaysian unit, and details such as the fundraising amount haven't been set, the people said. A Kuala Lumpur-based spokesman for Lotte Chemical Titan didn't respond to phone calls and an e-mail seeking comment, while Lotte Group said in an e-mailed statement that it can't verify any potential plans for the Malaysian unit to pursue an IPO.

Plastics produced by Lotte Chemical Titan include polyethylene, used in shopping bags and toys, as well as polypropylene, which can be found in battery casings and car parts. The company also makes olefins that are part of the manufacturing process for rubbers and detergents.

Lotte Chemical, when it was called Honam Petrochemical Corp, bought Titan Chemicals Corp in a 2010 all-cash deal valued at US$1.25 billion and delisted the company the next year.

BLOOMBERG