[obrolan-bandar] FW: Taking Off in Indonesia: IPOs, Finally
Date: Sat, 8 Sep 2007 22:20:28 +0700
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From: dadibudiana(*)hsbc.co.id [mailto:dadibudiana(*)hsbc.co.id]
Sent: 07 September 2007 12:08
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Subject: Taking Off in Indonesia: IPOs, Finally
Taking Off in Indonesia: IPOs, Finally
Coal Firms Lead Pickup Amid Burning Demand For Fuel in China, India By TOM
WRIGHT September 5, 2007; Page C1 JAKARTA, Indonesia -- The local stock
market here is among the world's top performers this year, but initial
public offerings have been few and far between. Until now.
A combination of a booming economy, a renewed government effort to list state-owned companies and talk of various incentives for companies with new listings is fueling a pickup in IPO activity. At the front of the line: three Indonesian coal producers enjoying rocketing commodity prices and seeking to raise a total of $1 billion by early next year. All told, the stock exchange expects 25 IPOs this year, more than double the 12 of last year.
PT Adaro Coal hopes to raise $600 million in the sale of a 20% stake in early 2008, cashing in on soaring demand from India and China. It would be the biggest offering by far of new shares in an Indonesian private-sector company since the Asian financial crisis a decade ago. PT Berau Coal and PT Indo Tambangraya Megah, owned by Thailand's Banpu PLC, each plan IPOs of about $200 million this year.
The Jakarta Stock Exchange is up 23% this year after rising 55% in 2006. Shares of publicly traded coal companies have been among the leaders, with PT Bumi Resources, one of the country's biggest producers, the top performer on the Jakarta Stock Exchange among large companies. Its stock price has tripled since January.
Investors like the coal sector, in particular, because of strengthening demand from Indian steelmakers and Chinese electricity producers. This year India's Tata Power Co. paid $1.3 billion for 30% stakes in two large coal mines from Bumi Resources to ensure Tata has access to coal supplies as it expands. China is ramping up Indonesian coal imports as its domestic output fails to keep up with surging demand. Further, demand in Indonesia is set to increase with a Jakarta plan to build coal-fired power plants with a total capacity of 10,000 megawatts, enough to supply power to about three million homes.
Bottlenecks at ports in Australia, a major coal producer, have added to the demand for Indonesia's exports. Indonesia has overtaken Australia as the world's largest thermal coal producer, which is used in generating electricity, and has huge untapped reserves -- by some estimates 67 billion tons.
Coal production is increasing rapidly, with output more than doubling to 212 million tons in 2006 from 85 million tons in 2000. Some analysts estimate domestic demand for Indonesian coal could double within five years.
In the 1990s, a number of Indonesian companies went public, many of them controlled by the government. Indonesia's largest IPO was the 1995 listing of state-owned PT Telekomunikasi Indonesia, which raised $1.6 billion. Foreigners were eager buyers. IPOs typically have shares set aside for overseas investors and give them a greater chance of buying large chunks of shares than in already listed companies, many of which are thinly traded.
But the 1997-98 Asian financial crisis and a prolonged economic slump chilled interest in Indonesian markets for most of the past decade.
The stock market has been roaring back to life since mid-2006 amid an improving economic outlook. Still, this rebound until recently didn't spark new listings.
Many large private-sector companies have shunned IPOs, preferring to issue rupiah- and dollar-denominated bonds to raise cash.
Many prominent companies, such as cigarette maker PT Djarum and personal-care company PT Wings Corp., have preferred to remain unlisted and outside the scrutiny of the public markets.
One oft-cited reason for this: the failure of regulators to offer tax breaks to promote new listings the way neighboring countries have, says James Bryson, director at HB Capital Indonesia, a Jakarta fund-management company.
The stock exchange now is lobbying the government for a 5% reduction in taxes on companies that list more than 15% of their total share capital, mirroring incentives offered in Thailand and Vietnam. The government is reviewing the plan..
The relative lack of Indonesian IPOs has stunted the domestic stock market's
growth, analysts say.
The companies traded on the Jakarta exchange have a total market
capitalization of $160 billion, 30% smaller than the main Thailand market,
despite Indonesia's much larger economy. (Thailand's gross domestic product
is expected to reach $265 billion in 2007, compared with $415 billion for
Indonesia.)
Resource-rich Indonesia has benefited recently from strong demand for commodities including gold, nickel and copper, in addition to coal.
The broader economic picture also looks good, many analysts say. President Susilo Bambang Yudhoyono, who came to power in late 2004, has restored political stability. Interest rates are falling, corporate profits are on the rise and economic growth is forecast to reach 6.2% this year, all helping to buoy stocks.
David Fergusson, head of research at Citigroup Global Markets in Jakarta, believes Indonesia is at the start of an economic upswing and forecasts the main stock index will reach 2600 within 12 months, up from 2215.12 at yesterday's close..
Many local companies are looking to tap that surging market to help fund the expansion of their operations. In June, diversified media concern PT Media Nusantara Citra raised $420 million in an IPO. The same month, the IPO of PT Sampoerna Agro, a palm-oil plantation operator, raised $120 million.
Mr. Yudhoyono's administration also is pushing ahead with a long-stalled plan to sell minority shares in state-owned enterprises. In July, the government sold a 26% stake in PT Bank Negara Indonesia, the nation's third-largest lender, for $880 million, although the share fell below the issue price shortly after amid the recent world-wide market turmoil.
The bank already was listed on the Jakarta exchange, but 99% of the shares were owned by the government before the offering. Jakarta plans to sell a minority stake in toll-road operator PT Jasa Marga by year end.
The IPO revival will be a boon to several U.S. hedge funds and banks. Adaro's IPO in particular could provide a profitable exit from an earlier bet on the company. In 2001, Indonesian private-equity firms Saratoga Capital and Persada Capital Investama bought a 40% stake in Adaro and another mining company for $46 million. The firms later increased their Adaro stake to 51%. At the time, coal prices were low and Indonesia's economy was in the doldrums.
Write to Tom Wright at tom.wright(*)dowjones.com1 <<Indonesia Coal.gif>>
(See attached file: Indonesia Coal.gif)
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