KUALA LUMPUR (July 15): TMK Chemical Bhd, a chemical management and storage company, has filed for an initial public offering (IPO) on the Main Market to raise funds for expansion of one of its plants and the construction of a new facility in Singapore.

Founded in 1989 by the youngest of the billionaire Lee brothers of plantation giant Kuala Lumpur Kepong (KL:KLK), the company is currently controlled by Datuk Lee Soon Hian. He resigned as an executive director of KLK in 2004, and bought his brother Datuk Lee Hau Hian's shares in 2006 to focus on TMK.

The proposed IPO comprises entirely of 220 million new shares, representing 22% of the enlarged share capital, at a price to be determined later, according to the draft prospectus posted to the Securities Commission Malaysia. There is no separate sale of existing shares.

TMK plans to build another plant occupying up to 55,900 sq m next to its existing plant in Banting. “Similarly, we will be manufacturing chlor-alkali derivatives, namely sodium hydroxide, chlorine, hydrochloric acid, sodium hypochlorite and hydrogen at our Banting Plant 2.”

The company also plans to build a new processing facility in Singapore, though TMK is still “in the midst of identifying suitable locations for the new facility, taking into account the location, land cost and readiness of infrastructure”.

TMK provides sourcing, processing and distribution of acids, alkalis, salts and other chemical products. The company 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.

The company operates out of Malaysia, Singapore and Vietnam, and also provides bulk storage services for liquid chemicals at terminals in Pasir Gudang and Kemaman. For the financial year ended Dec 31, 2023, TMK made a net profit of RM91.6 million on revenue of RM1.31 billion.

The proposed IPO involves an institutional tranche of 190 million new shares to institutional and select investors through bookbuilding, as well as a retail tranche of 30 million shares to eligible persons and the public. The final IPO price will be the retail price or the institutional price, whichever is lower.

Part of the proceeds have also been set aside for acquisitions and investments in inorganic chemicals or a similar industry. “We are exploring investment and acquisition opportunities in companies within the Asia-Pacific region which meet our criteria”, though no discussions had started, it said.

TMK will also partly repay Islamic term financing of RM250 million, and allocate some to meet its working capital requirements. The rest will go towards defraying listing expenses.

Maybank Investment Bank is the principal adviser, sole bookrunner and sole underwriter for the IPO.