Mitra Pinasthika Mustika (MPM), the distributor of Honda motorcycles in Indonesia, has raised Rp1.455 trillion ($150 million) from its initial public offering after fixing the price at the bottom of the indicative range.
MPM is the biggest IPO in Indonesia so far this year, surpassing Steel Pipe Industry’s $88 million offering in February, according to Dealogic. Steel Pipe makes a wide range of steel pipes, tubes and other related products, and supplies the oil and gas, automotive and furniture industries. Indonesia’s largest IPO last year was pay-TV operator MNC Skyvision’s $220 million deal in June, according to the data.
In March this year, private equity firm CVC Capital and the other controlling shareholders of Matahari Department Store raised $1.3 billion from a fully-marketed follow-on share sale, which due to a pre-deal free-float of less than 2% was essentially a re-IPO. The type of the offering aside, the sell-down in the country’s leading department store operator was a success and underscored the strong investor appetite for Indonesia’s consumer sector.
MPM is an integrated consumer automotive company with four major business pillars: distribution and retail; consumer parts; auto services; and financial services, according to its website. It is the exclusive distributor of Honda motorcycles in East Java and East Nusa Tenggara and one source said earlier that the company is a key way to get exposure to the consumer and auto sectors in Indonesia.
MPM sold 970 million new shares at a price of Rp1,500 each, sources said on Friday. The final price was fixed at the bottom of an indicative range of Rp1,500 to Rp2,000 and translated into a 2013 price-to-earnings ratio of 12.9 times.
This put it at a discount to its main comparables, which include other Indonesia-listed companies such as Astra International, Astra Otoparts, Indomobil and ASSA. As of last Friday, they were trading at 2013 P/E ratios of between 14 times and 17 times, according to Bloomberg data.
Sources had said that the exact number of shares to be sold would depend on the final price, but in dollar terms the company was targeting a deal size between $150 million and $178 million.
The deal was multiple-times covered when the order books closed last Wednesday (May 8) after a one-and-a-half-week international roadshow that took the management to Singapore, Hong Kong and London. More than 70 investors submitted orders, one of the sources says.
About 65% of the deal was allocated to international investors, while the remaining 35% went to domestic accounts. The majority of the shares was taken up by long-only institutions, the person also notes.
MPM plans to use part of the IPO proceeds to fund the construction of a new lubricant manufacturing and bottling facility, and for potential acquisitions of vehicle rental companies or businesses. The stock is set to start trading on May 29.
DBS, Deutsche Bank, Indo Premier Securities and Morgan Stanley arranged the deal.
The Indonesian stock market is on a bullish trend and the Jakarta Stock Price Index is up more than 18% since the start of the year. Elsewhere in the region, Hong Kong’s Hang Seng Index is up a mere 3%.
Mando China
Meanwhile, another auto-related company is looking to float its stock in Hong Kong. Mando China, a wholly-owned subsidiary of Mando Korea, is seeking to raise roughly $250 million from its offering. According to the current timetable, the roadshow is potentially kicking off later this week, possibly on Wednesday, with the listing eyed for May 31, a source says. Bankers started gauging investor appetite for the deal last Monday (May 6).
Following months of muted activity, the IPO market in Hong Kong is finally picking up. China Galaxy Securities and Sinopec Engineering (Group) kicked off their respective high-profile offerings last week, which together are looking to raise up to $3.6 billion. Both deals are scheduled to price later this week.
Mando China’s offering will likely comprise 25% primary and 75% secondary shares, according to the source. Despite its Korean ownership, investors see the company as a way to play the China auto market and the growth associated with that, the person also says.
Mando China is a holding company for the China operations of Mando Korea and one of the leading suppliers in China of chassis-related automotive parts, primarily brake, steering and suspension components and systems, according to the company’s draft prospectus. It will remain a majority-owned subsidiary of Mando Korea after the IPO, it says.
Mando China sells its products primarily to the China operations of global vehicle manufacturers, such as Beijing Hyundai, Dongfeng Kia and Shanghai GM, as well as to local Chinese vehicle manufacturers, such as the Geely companies, Chery Automobile and Changan.
Deutsche Bank and Morgan Stanley are joint bookrunners for the deal.
