According to Gaoke, about 131 million of the raised fund will be used to build a blending plant with capacity to manufacture 60,000 metric tons per year of lubes.

The construction of the new facility has started and is scheduled to be completed in 2018, Liu Junnan, Gaokes secretary of the board, told Lube Report Asia. He added that the facility is being built to increase capacity, not to expand the companys product line.

Gaoke buys base stocks mainly from Sinopec and PetroChina. It is a major supplier of industrial lubes, including transformer oils, bearing oils and gear oils. In recent years, however, part of its focus has shifted to engine oils despite of the increasingly intense competition in that segment.

We did see how fierce the competition is among engine oil producers, but we also see opportunities in such a massive automobile market, Liu said, adding that the IPO also helps promote recognition of the companys brands.

Gaoke is new to the engine oil market, which are crowded with foreign and Chinese brands, Liu said. So we hope the IPO could make us more famous in the market.

Gaoke offers several lines of engine oils, each with a different focus, including synthetic formulation, energy efficiency and provision of long drain intervals.

Once the research center is built, Liu said the company will work with clients and colleges to develop more durable lubes, especially for industrial clients. The company believes the governments Made in China 2025 strategy will be a boon to industry and create more opportunity for industrial lubes marketers.

To improve quality and become efficient, manufacturers will have to buy high quality imported equipment and devices, which need to be fed with high quality lubes, Liu said.

Gaoke initially planned to have an IPO last summer, but the process was halted due to a large stock market crash at the time.