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The distributor of Honda motorcycles in Indonesia, Mitra Pinasthika Mustika (MPM), is seeking to raise $150 million to $178 million from an initial public offering with the bookbuilding and management roadshow already underway.
The price range was announced on Friday and the international roadshow, which will take the management to Singapore, Hong Kong and London, kicked off on Monday this week. The order books are expected to close on May 8, with the listing scheduled for May 29.
Even at the lower end of the targeted size, MPM will be 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.
However, 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 in March, which due to a pre-deal free-float of less than 2% was essentially a re-IPO. The sale of a 40% stake in the country’s leading department store operator attracted more than 220 investors, reflecting the strong appetite for Indonesia’s popular consumer sector.
Also in the same sector, Indonesian supermarket chain Hero Supermarket is planning a rights issue, which could raise as much as $357 million. The company plans to use the proceeds mainly to repay debt and fund its store expansion.
The Jakarta Stock Price Index has gained about 17% since the start of the year. By comparison, Hong Kong’s Hang Seng Index is up just 0.4% year-to-date.
MPM
The company plans to sell up to 1.015 billion new shares at a price between Rp1,500 and Rp2,000 each, according to two sources. The exact number of shares to be sold will depend on the final price, they said. In dollar terms, the company is aiming to raise between $150 million and $178 million.
The price range translates into a 2013 price-to-earnings ratio of between 12.9 times and 16.6 times, one source said. Its main comparables include other Indonesia-listed companies such as Astra International, Astra Otoparts, Indomobil and ASSA, which trade at 2013 P/E ratios between 13.5 times and 16.4 times, according to Bloomberg data.
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.
The company is the key way to get exposure to the consumer and auto sectors in Indonesia, the second source said.
MPM plans to use 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.
DBS, Deutsche Bank, Indo Premier Securities and Morgan Stanley are arranging the deal.
Hero Supermarket
Hero Supermarket plans to sell up to 889.4 million new shares at a price between Rp3,200 and Rp3,900 each through the rights offering, according to a source. The price range indicates a deal size of between Rp2.8 trillion and Rp3.5 trillion ($293 million to $357 million).
The exact terms haven’t been determined yet, but shareholders will get to buy between 23 and 27 rights shares for every 100 existing shares.
The price range represents a discount of 16.6% to 31.6% to Monday’s closing price of Rp4,675, and a discount of 13.5% to 27.3% to the theoretical ex-rights price (Terp) of Rp4,399 to Rp4,510.
After the initial announcement of the rights issue on Tuesday, Hero’s stock finished the day 2.7% lower at Rp4,550, but remained comfortably above the price range.
Mulgrave Corp, a wholly owned subsidiary of Dairy Farm that owns 80.75% of the Hero, has assigned its rights to Dairy Farm which will take up its full entitlement, the source said.
Dairy Farm operates supermarkets, hypermarkets, health and beauty stores, convenience stores, home furnishings stores and restaurants under well-known brands across Asia. It is part of the Hong Kong-based, but Singapore-listed Jardine Matheson group.
Aside from the earlier mentioned debt repayment and store expansion, Hero intends to use part of the proceeds to fund the development of its first Ikea store, which is expected to open sometime in the first half of next year, the source noted. Hero has a franchise agreement with Ikea in Indonesia.
The rights issue needs to be approved at a shareholders meeting on May 31. Assuming it gets that, the shares will start to trade ex-rights on June 11. The record date for the rights issue will be June 13. Bahana Securities and CLSA are advising on the deal.
