BlueBird, the Indonesian taxi company, raised Rp2.4 trillion ($200 million) in a Jakarta initial public offering on Friday night.
It was less than the third-generation run group aimed to raise — it initially sought as much as $300 million. However, BlueBird had to contend with paltry equity market conditions in the past few weeks, which weighed on a number of recent IPOs.
The Jakarta Stock Exchange is up 15% year-to-date, although, like other bourses, it has retreated in recent weeks amid worries of lower growth forecasts. It has dropped 6% since mid-September.
As such, BlueBird fixed the price at Rp6,500 per share and sold 376.5 million shares. It originally sought to sell between 397.9 million and 513.9 million primary shares at Rp7,200 to Rp9,300 per share. The Rp6,500 price puts its 2015 p/e valuation at 15.5 times, compared to 17.1 to 20.1 times under the old valuation, and down from syndicate analysts’ fair value estimates of 18 to 24 times.
The issuer also decided to scrap the secondary tranche altogether, as the current shareholders did not want to sell stock at the lower valuations.
Sources close to the deal note that institutional orders were covered since day one, although most of the demand came in at the bottom of the range. Allocations were still being finalised on Friday night, although bankers close to the deal note that the majority of the book was made up of Asian sovereign wealth funds and long-only institutional investors, and was multiple times covered.
“A few hedge funds have put in orders,” one banker told FinanceAsia, highlighting one large order on Friday night. However, given recent market volatility, the syndicate is focused on ensuring the majority of the book is made up of sticky money to avoid any sell-offs. As such, the syndicate is focused on guaranteeing that investors who placed orders on day one receive their fair share of the book. “Who knows where markets will be when it lists on November 5,” he added.
BlueBird wound up being in line with its closest domestic comparable, PT Express Transindo Utama, which is currently trading at 14.7 times 2015 earnings, and at a significant discount to retailer Matahari Putra Prima, which is trading at 25.2 times 2015 earnings.
The taxi operator did not have trouble garnering interest. BlueBird is already well known among investors — it initiated pre-marketing in 2013. This was halted, however, due to a family lawsuit.
Good consumer story
BlueBird's has been one of the country’s most eagerly anticipated IPOs, representing an attractive consumer play. It has a colourful background to match.
Founded by the late Mutiara Djokosoetono in 1972 with 25 cars, BlueBird now boasts a fleet of more than 30,000 vehicles and operates across 17 cities in Indonesia. It has been whisking locals and international travellers around Jakarta for the past four decades, with repeat customers citing the company’s reliability, clean cars and knowledgeable drivers as main reasons why it’s been around for so long.
A number of risks remain — increasing fuel prices will hit BlueBird’s bottom line, since the company absorbs all of the cab costs and not its drivers. However, the company can adjust its tariffs to counter rising costs.
Following a June 2013 price hike from Rp4,500 per litre to Rp6,500 per litre, BlueBird in September 2013 raised its base fare from Rp6,000 to Rp7,000 and its rate per kilometre from Rp3,000 to Rp3,600.
Plus, Indonesian infrastructure — or lack thereof — means taxi operators should continue to thrive, at least until the government provides dependable trains, buses and monorail systems. Government officials have pledged to invest billions in the country’s infrastructure, including roads, buses, railroads and airports. But completing these projects will take years. And during this time, taxis will remain the best form of transport.
