Astra International, a majority shareholder of Astra Otoparts, started the bookbuilding and management roadshow yesterday for a fully marketed secondary share placement in the Indonesian automotive parts company, aiming to raise between $251 million and $298 million, sources say. The books are expected to close on Tuesday, May 28.
The placement comprises 100% secondary shares, and the proceeds are going to the parent company. It will increase Astra Otoparts’ free-float to about 20% from 4%, they say. Due to the limited free-float and thin trading volumes prior to the offering, the share sale is conducted in the same way as an IPO, with a full management roadshow and a price range — the kind of deal commonly referred to as a re-IPO.
The sell-down also comes as investors continue to like the country’s consumer growth story. In March, 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. Matahari is Indonesia’s leading department store operator, and the deal was the biggest equity capital markets transaction in the country since Bakrie & Brothers raised $4.4 billion from a rights issue five years ago.
Astra International is offering 754.5 million shares in Astra Otoparts for a price between Rp3,250 and Rp3,850 per share, set to raise up to $298 million. The deal size represents 15.7% of the company, and the price range translates into a 2014 price-to-earnings ratio of between 11.5 times and 13.7 times, one source says.
Astra International holds a 95.7% stake in Astra Otoparts, meaning its holding will be reduced to 80% after the transaction, according to another source.
After the launch of the deal, Astra Otoparts’ stock jumped 3.8% yesterday to end at Rp3,450, though it is down 2.8% so far this year. Meanwhile, the Jakarta Stock Price Index, which was up 0.4% yesterday, has climbed about 21% year-to-date.
Indonesia’s overall ECM volumes stand at $2.4 billion since the start of the year, of which nearly $2 billion has come from follow-on deals, according to Dealogic. That compares with the overall ECM volumes of $1 billion during the same period last year.
Astra Otoparts, which is the producer and distributer of spare parts for cars and motorcycles, is Indonesia’s biggest automotive component company, according to its website. After a number of transformations and corporate name changes, Astra Otoparts was established in 1997 and registered its shares on the Jakarta Stock Exchange (now the Indonesia Stock Exchange) the following year.
The company has no direct comps, but investors will likely look at other listed auto-related companies, such as Indomobil Sukses Internasional and Selamat Sempurna, as well as Malaysia's UMW Holdings, which are trading at 2014 P/E multiples of around 11.5 times, 14.2 times and 14.3 times, respectively, according to Bloomberg data.
Astra Otoparts makes parts for manufacturers such as Toyota, Honda, Yamaha, Kawasaki and Hino, according to its website, and also makes replacement parts that are distributed throughout Indonesia, as well as to more than 40 countries around the world.
Astra International is one of Indonesia's biggest national companies and has six business segments: automotive, financial services, heavy equipment and mining, agribusiness, infrastructure and logistics, and information technology.
