KUALA LUMPUR (Nov 25): Chemical management and storage company TMK Chemical Bhd has unveiled the prospectus for its Main Market initial public offering (IPO) to raise some RM385 million, as part of its plan for the expansion of its plant, construction of new facilities and acquisition.
The IPO, priced at RM1.75 sen per share, entails the issuance of 220 million existing shares and does not involve any offer for sales of shares, the prospectus showed. The listing would offer investors up to 22% in the company.
Application for the IPO closes on Nov 29, with the company's listing scheduled for Dec 12.
Founded in 1989, TMK Chemical is currently controlled by Datuk Lee Soon Hian, the youngest of the billionaire Lee brothers of plantation giant Kuala Lumpur Kepong Bhd (KL:KLK). Soon Hian owns a 50.6% stake in the company.
The company is mainly involved in the provision of total chemical management services consisting of sourcing, processing and distribution of inorganic chemicals including acids, alkalis, salts and other chemical products as well as providing value-added services for these.
TMK Chemical began manufacturing chlor-alkali derivatives, such as sodium hydroxide or caustic soda used in making of soap and detergents, at its Banting plant 1 in May this year.
At the offer price of RM1.75, TMK Chemical would have a market capitalisation of RM1.75 billion based on the enlarged share capital of 1 billion shares and value the company at 19 times its 2023's earnings. For the financial year ended Dec 31, 2023, TMK made a net profit of RM91.6 million on revenue of RM1.31 billion.
TMK Chemical has allocated RM90.2 million (23.4%) of the proceeds for the expansion of the Banting Plant 1 and another RM49.5. million (12.9%) budgeted as a construction cost for a new facility in Singapore which includes chemical processing services in the region.
TMK Chemical currently operates 15 facilities across Malaysia, Singapore and Vietnam, in addition to two terminals and one manufacturing plant in the country.
The company also intends to use RM99.1 million (25.7%) for the acquisition of target companies to be identified which operate in the inorganic chemicals industry or other chemical-related industries. “We have identified a target business but the acquisition plan is still in a preliminary phase”.
The remaining RM50 million (13%) will be allocated for repayment of borrowing, RM79.4 million (20.6%) for working capital and the balance for the listing-related expenses.
Maybank Investment Bank is the principal advisor, sole bookrunner and sole underwriter for the IPO.