Indonesian conglomerate Lippo Group offloaded a small slice of its stake in Matahari Department Store through a Rp1.64 billion ($125 million) accelerated bookbuild late on Monday, marking its first selldown since the retailer floated the bulk of its shares three years ago.
The Chinese-Indonesian conglomerate offered a total of 87.5 million Matahari shares - equivalent to 3% of the mall operator’s outstanding share capital – at an indicative price range of Rp18,735 to Rp19,305 per share, or a discount of 2% to 4.9% to Matahari’s Monday close.
Lippo Group sold the shares through its investment holding company Multipolar, which owns the majority of the group’s retail and information techology assets including Hypermart and Visionet.
A frequent selldown target in the secondary market, Matahari Department Store is one of the Indonesian stocks most familiar to international investors. Private equity firm CVC Capital Partners has offloaded its entire 57% stake through multiple block trades in the past three years, most recently a $227 million share sale in May this year.
CVC began selling its stake in Matahari in 2013 through the department store operator’s massive $1.3 billion follow-on share sale. The transaction was dubbed a re-IPO since Matahari had scarcely been traded on the Jakarta Stock Exchange since its original 1989 listing because its free float was less than 2%.
Unlike CVC, Lippo Group had never disclosed its intention to sell its Matahari stake; Monday’s trade therefore created an overhang for the group’s remaining stake. In addition, the fact Monday was the Labour Day holiday in the US also piled the pressure on sole bookrunner UBS to push the deal cross the finishing line.
Yet Matahari’s track record of good post-deal share price performance helped entice demand. Despite multiple block trades at discounted market prices, Matahari shares have been advancing gradually since its re-IPO, gaining 75% since 2013.
Also aiding the deal was the strength of the Indonesian equity market since President Joko Widodo passed a tax amnesty law in late June, a move which is expected to see billions of dollars held offshore returned to the country. On Monday, the Jakarta Composite closed at 5,356 points, just 3% shy of the all-time high achieved in May last year.
These factors helped Lippo Group attract decent demand, sufficient to cover the order book. According to a source familiar with the situation, allocations were made to around 30 accounts with a mix of long-only and hedge funds as well as domestic institutions.
The final price was settled at the widest end at Rp18,375 that equates to a 4.9% discount, which was tighter than the last block trade in May which was completed with a discount of 8.2%.
Lippo Group remains Matahari's biggest shareholder, but its holding has dropped to 17.5% from 20.5% following Monday’s sale.
