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UPDATE 1-Lotte Chemical Titan cuts Malaysian IPO size on tepid investor response
July 3, 2017 / 9:32 AM / 3 months ago

UPDATE 1-Lotte Chemical Titan cuts Malaysian IPO size on tepid investor response

* Lotte says no. of shares in IPO cut to 580 mln from 740.5 mln

* Price range lowered to 6.50-8.0 rgt from pvs 7.60-8.0 -sources

* Despite cut, IPO to still be biggest in Malaysia since 2012

By Liz Lee

KUALA LUMPUR, July 3 (Reuters) - Malaysia’s Lotte Chemical Titan Holding cut the size of its initial public offering on Monday due to tepid demand for its shares, casting a shadow on other potential large floats and an anticipated revival of IPOs in the Southeast Asian nation.

The integrated petrochemical producer, part of South Korean conglomerate Lotte Group, said it reduced its public shares on offer by a fifth to 580 million shares from the initially planned 740.5 million.

It also lowered the IPO price range to 6.50 ringgit-8.00 ringgit per share, according to sources, compared to the earlier expected 7.60-8.00 ringgit range.

Despite the reduction, Lotte Chemical Titan’s IPO is set to be Malaysia’s biggest since 2012, estimated to raise between $877.7 million and $1.1 billion.

The company was to have priced the offer last week but relaunched it for a day on Monday to institutional investors, which constitutes the bulk of the IPO, as lagging investor interest resulted in an undersubscribed book.

Lotte Chemical said in a statement that “after taking into account the overall demand through price discovery, the company... decided to reduce the offering size for the institutional offering.”

Two sources said that the IPO’s retail portion, which closed last week, was around one-third undersubscribed. A Hong Kong-based banker close to the deal said retail interest for the IPO was weak as investors deemed the offer pricey.

Lotte Chemical did not immediately respond to a request seeking comment.

Appetite for IPOs in Malaysia had dwindled on the back of a weak currency, volatile commodities markets and a government-linked corruption scandal. The market saw some revival earlier this year with the listings of Serba Dinamik Holdings Bhd and Eco World International Bhd .

The success of Lotte’s listing is critical for other firms that are considering IPOs after holding off for years due to poor market conditions. The launch of large IPOs this year is seen as a sign that confidence has returned to the market, but some are questioning if the positive sentiment is overestimated.

Lotte Chemical Titan originally planned the IPO for last year but postponed it after South Korea began investigating Lotte Group for alleged wrongdoing.

Other deals reportedly in the pipeline in Malaysia include fast food operator QSR Brands looking to raise about $500 million and Edra Energy targeting $500 million to $1 billion.

Lotte’s relaunched offer is open until 2200 local time on Monday. The final pricing of the IPO is expected on Tuesday, and listing is scheduled for July 11.

“The book is now in a much better position at the 6.50 ringgit offer. There are anchor orders that more than cover the institutional deal size, inclusive of the greenshoe option,” said the banker, who declined to be named as the process was private.

The IPO drew Permodalan Nasional, Eastspring Investments, Great Eastern Life Assurance Malaysia, Maybank Asset Management and Maybank Islamic Asset Management to sign on as cornerstone investors.

Credit Suisse, JPMorgan and Maybank are joint global coordinators for the IPO. Bookrunners are CIMB, HSBC and Nomura. ($1 = 4.2955 ringgit) (Reporting by Liz Lee; Editing by Muralikumar Anantharaman)

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