Petronas Chemicals to Fund New Plants, Acquisitions From $4 Billion IPO

Petronas Chemicals Group Bhd., a unit of Malaysia’s state oil company, plans to use proceeds from the country’s biggest initial public offering to fund expansion that may include a chemical plant off the east coast.

“We are studying the possibility of developing a greenfield ammonia and urea production facility that would be supplied with natural gas feedstock available off the coast of East Malaysia,” the petrochemicals company said in a listing prospectus published today. The IPO may raise about 12.5 billion ringgit ($4 billion), with some of the money also earmarked for acquisitions, it said.

Petronas Chemicals plans to use some of the proceeds to increase production capacity by adding new plants, the document shows. The company is evaluating developing a refinery and petrochemicals complex in Peninsular Malaysia.

The share sale is set to be the biggest in Southeast Asia this year, surpassing the $2.7 billion raised by Global Logistic Properties Ltd. in Singapore last month. It may also exceed the $3.3 billion raised by Maxis Bhd., Malaysia’s biggest mobile- phone operator, last year.

Twenty-two petrochemicals-related companies were combined to form Petronas Chemicals, the document shows. CIMB Investment Bank Bhd., Deutsche Bank AG and Morgan Stanley & Co. International plc are managing the share sale.

Profit Climbs

Net income rose 61 percent to 814 million ringgit in the four months ended July 31 from 505 million ringgit a year earlier, the company said. Revenue climbed 30 percent to 4.2 billion ringgit from 3.3 billion ringgit a year earlier.

Petronas Chemicals proposes a dividend policy of 50 percent of its annual profit, starting from the year ending March 31, 2011, according to the document.

The IPO is the second this year by a unit of Kuala Lumpur- based Petroliam Nasional Bhd., following Prime Minister Najib Razak’s call in March to attract international investors to the country’s stock market by listing large companies.

Malaysia Marine, a rig-builder held by Petronas’s MISC Bhd., jumped 19 percent to 4.51 ringgit in its trading debut on Oct. 29 after institutional investors bid for more than 27 times the shares allocated to them.

The Petronas group has five units traded on the Kuala Lumpur stock exchange, including Malaysia Marine. The others are MISC, Petronas Dagangan Bhd., Petronas Gas Bhd. and KLCC Property Holdings Bhd. It will decide next year whether to sell shares in more divisions, Chief Executive Officer Shamsul Azhar Abbas said on Oct. 4.

Petronas Chemicals shares are scheduled to trade for the first time on the Kuala Lumpur stock exchange on Nov. 26.

To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.