The deal is the second sell-down in an Indonesian government-owned company this year following the re-IPO of PT Bank Negara Indonesia (BNI) at the end of July, which raised $774 million, of which about 43% went into the state coffers. The sale cut the governmentÆs stake in BNI from 99.1% to about 73%.
Jasa MargaÆs offering had a slow start, partly due to a set of Indonesian holidays during the roadshow, but the deal picked up pace and, when it closed on Friday, it was more than four times covered with participation from approximately 80 accounts, according to sources. This enabled the company to fix the price towards the top end of the range at Rp1,700. The shares were offered in a range between Rp1,400 and Rp1,800.
The company was selling 2.04 billion new shares, or 30% of the share capital, allowing the government to reduce its stake from 100% to 70%. About 40% of the institutional tranche went to international investors, while the remaining 60% was allocated to domestic Indonesian investors. Credit Suisse and UBS acted as lead managers for the international tranche and were also joint bookrunners together with Bahana Securities, Danareksa Sekuritas and Mandiri Sekuritas.
The final price values the toll road operator at about 22.5 times its projected 2008 earnings, which is at a premium to MalaysiaÆs largest toll road operator Plus Expressways at about 15 times.
Interest from domestic institutions in the deal is seen to have been boosted by a the fact that state-owned insurer (Jamsostek) Hotbonar Sinaga subscribed to Rp600 billion worth of Jasa Marga stock, according to the President Director as quoted by local media. However, observers note that there is quite a lot of interest in Indonesia from international investors at the moment on the back of strong economic growth numbers.
ôIndonesia is picking up demand from people who want to put their money into something other than China and the amount of money pouring in from the US at the moment is just huge,ö says one banker, noting that this is partly driven by a lack of confidence in domestic US assets and in the dollar.
ôSo people are taking money out and placing it somewhere overseas. That money is obviously chasing China, and it has been chasing India. However, many people, and hedge funds in particular, are very upset about the P-notes business and have been looking for another home for their investments. Some of that money is going into Indonesia,ö he adds.
The Indonesian stockmarket has risen 45% year-to-date.
A clear sign of the interest is that investment banks are getting reverse inquiries from US investors looking for opportunities to increase their exposure to certain Indonesian stocks. The smaller IPO for privately owned blue-chip developer Ciputra Properties that closed on October 18 also attracted a strong following from both domestic and overseas investors, which prompted the company to increase the size of the deal to 49% of the share capital from the original 40%. This will allow it to raise about $230 million.
CiputraÆs final price hasnÆt been confirmed yet, but a local newspaper has reported that the shares will be sold at Rp700 apiece, or towards the upper end of the Rp570 to Rp800 offering range. The deal was jointly arranged by Citi and Danareksa.
However, some investors were said to have been a bit hesitant about committing too much money at a high valuation to Jasa Marga in light of BNIÆs poor performance following its offering. That deal was priced at the bottom of the indicative range, but even so, the stock fell through the offering price five days after the July 31 pricing and at one point traded as much as 20% below the re-IPO price of Rp2,050. It has recovered most of those losses, although on Friday it was still trading slightly below the offer price at Rp2,025.
Jasa Marga operates 492km of toll roads, or 78% of the countryÆs total toll roads, under 13 concessions from the government. It has also been awarded the contract to construct and operate three additional road projects that will connect to this existing toll road network and add another 119 km of roads. Just over half of the proceeds from the IPO will go towards the construction of these roads, while the remainder will be used to increase the traffic capacity on some of its existing roads. A small portion ($16.6 million) will be used to repay the principal on a Rp150 million billion bond that will mature in early-2008.
Among its key strengths, Jasa Marga lists its near 30-year experience in the operation of toll roads. Up until 2004 it also had a dual role as an operator and regulator of the Indonesian toll road industry, which makes it an ôattractiveö partner for other private toll road operator as the government continues to develop the countryÆs road infrastructure.
At present, Jasa Marga holds minority interests in other companies with a combined 130km of toll roads under their control, which represents about 21% of the countryÆs total toll roads.
The stock is scheduled to start trading on November 12.
Aside from BNIÆs more than $774 million offering, which was led by JPMorgan and Bahana Securities and has to count as an IPO given the miniscule freefloat of less than 1% before the sale, Jasa MargaÆs offering was also surpassed in size by TV network operator Media Nusantera CitraÆs (MNC) $416 million IPO in June this year. The international portion of that deal was led by Deutsche Bank, Lehman Brothers and UBS.
According to Dealogic data, the countryÆs second largest IPO since the financial crises was the $484 million offering for Bank Rakyat Indonesia in 2003.
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