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Chemoil set to launch S'pore IPO this month

CHEMOIL Energy, which market players expect will raise between US$400 million and US$500 million, looks set to launch its initial public offering (IPO) towards the end of this month as the company lodged its preliminary prospectus with the Monetary Authority of Singapore (MAS) yesterday.

Chemoil will be selling 382.2 million shares, comprising new and vendor shares by way of an international placement and a Singapore public offer.

This group, which had revenue of US$2.04 billion and net profit of US$25.2 million for the six months ended June 30, is aiming to list on the main board of the Singapore Exchange. Total assets and net assets for the group as at end-June were US$633 million and US$118 million respectively.

Chemoil traces its roots to 1981 when Robert Chandran, who is executive chairman and chief executive officer, began trading marine fuels in California. Today, it is a leading integrated physical supplier of marine fuel products globally.

The group has physical operations in ports around the world including Los Angeles, New York, Houston, Singapore, Panama, and the Amsterdam, Rotterdam and Antwerp region. At all of these ports, Chemoil owns or leases terminal capacity for the storage and blending of fuels and barging facilities for the delivery of marine fuels to customers.

According to Bunkerworld, Chemoil is one of the largest independent physical suppliers of marine fuels in the world, with the volume of fuel sold growing at a compound annual growth rate of 14.7 per cent over 2003 to 2005 to about 13.3 million tonnes.

Chemoil says its competitors in supplying marine fuel include oil majors like Shell Oil and ExxonMobil, large independents like Bominflot Group, government owned-supply companies like Saudi Arabian Oil Company, and regional independents like Hin Leong Trading.

Post the IPO, Mr Chandran will own 39 per cent of the group, while Itochu Corporation's direct and deemed interest will total 34 per cent. The amount of shares held by IPO investors will be 27 per cent.

Chemoil intends to use funds raised from the IPO to expand operations globally. Some of the proceeds will be used for potential corporate acquisitions, joint ventures, asset acquisitions and construction of facilities such as terminals. Chemoil's strategic plans include expansion into new markets, focusing on high-volume locations, expansion into new product lines, marketing to large international companies and enhancing cost advantages.

The joint bookrunners of Chemoil's IPO, to be one of the largest in Singapore this year, are JPMorgan, Morgan Stanley and UBS. The IPO pricing has yet to be set.

International trade levels and the resulting level of activity in the marine transportation industry are the key factors in determining global demand for marine fuel, which is consumed by ships' engines. Bunkerworld expects the global marine fuel market to grow by an average of 1.5 per cent to 3.5 per cent per year until 2020, based on global economic prospects and expected global fleet size.