Lopal IPO Fetches $71 Million

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In its initial public offering, Jiangsu Lopal Petrochemical Co. raised 494 million (U.S. $71.68 million) to build several new production, warehouse and office facilities.

The Chinese lubricants and car care products supplier raised just short of its goal of 495 million during its IPO conducted on the Shanghai Stock Exchange last week.

According to its prospectus, the Nanjing-based firm will use the funds in its 897 million facilities construction plan, which includes spending 200 million on a facility that will produce 120,000 metric tons per year of lubricants and antifreeze in Tianjin; 150 for a 200,000 t/y urea production plant; 50 million on an office building in Nanjing; and 45.2 million for a warehouse in Nanjing.

Founded in 2003, Lopal had been an automotive and industrial lubricants supplier until 2009, when it began producing urea under the brand Kelas and car care products such as coolants under the brand 3ECARE. Lopal said it plans to become a one-stop solution provider in Chinas growing automotive aftermarket sector, which Beijing-based consultancy iResearch estimates to reach 800 billion this year.

Although tie-ups with multinational original equipment manufacturers are a much-coveted income source for private Chinese lube suppliers, Lopal said that they are notoriously hard to attract. So Lopal instead decided to target domestic automakers, noting that it managed to establish partnerships with some of the biggest, such as Anhui province-based JAC Motors and Shanghai-based SAIC Group. Lopal will aim to provide these customers a richer product portfolio that includes eco-conscious car care products.

The firm primarily buys API Group II base oils from Taiwanese producer Formosa Petrochemical. The rest it procures from Koreas SK Lubricants, and ExxonMobil, which has a refinery in Singapore.

In 2016, Lopals lubricants business profit was 695 million, up 32 percent from 2015 and accounting for nearly 68 percent of its total income.

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