Tempo Scan share sale increased to $229 million

The controlling shareholder of Indonesia’s Tempo Scan Pacific has raised Rp2.12 trillion ($229 million) from the sale of existing shares through a fully marketed transaction that was enlarged beyond the previously announced deal size, pushing the free-float above 20%.

Bogamulia Nagadi ended up selling a total of 800 million shares in the pharmaceutical, consumer products and cosmetics company, which is 18.5% more than the initial base deal and upsize option combined. The deal was also priced at the top of the indicated range at Rp2,650, providing further evidence that investors like the Indonesian consumer demand story.

The seller initially offered about 500 million shares through the base deal and also had the option to upsize the transaction by a further 175 million shares, which at the top of the price range could have raised a maximum of $190 million. The shares were offered at a price between Rp2,500 and Rp2,650 per share.

There was “almost no price sensitivity”, and quite a few investors during the course of the roadshow said that they wanted the deal size to be increased, said one source.

The order book was of very high quality and more than 80% of the deal was allocated to long-only institutions, including a number of big global funds and some Asian long-only institutions, the source said, adding that there was sovereign wealth fund demand as well. About 30 institutions took part in the deal.

The strong demand for the deal contrasted with the cautious mood in global equity markets this week as concerns about the eurozone debt crisis reignited after elections in France and Greece. On the other hand, that may have made the defensive nature of Tempo Scan’s business even more attractive.

At $229 million, this is the biggest equity capital markets transaction in Indonesia so far this year, ahead of a follow-on share sale of about $100 million by Indonesian contract mining and equipment rental company Petrosea.

After the transaction, the company’s free-float will increase to 22.8% from 5%, making the fully-marketed offering almost like a re-IPO of the company. Given that the stock is so thinly traded, the deal was marketed with a fixed price range, as opposed to a discount to the live share price, making it even more similar to an IPO. The stock on average trades only about $70,000 per day, according to the source.

Since the transaction was launched on Monday, Tempo Scan’s share price has climbed more than 10%, bringing its year-to-date gain to about 14% on top of a 50% jump in 2011.

Before the pricing, the stock ended yesterday’s trade flat at Rp2,900.

The final deal size represented 17.8% of the company’s outstanding share capital.

The source said that quite a few institutions had approached the company in recent years and tried to encourage it to increase the free-float and the liquidity of the shares, and long-only institutions had been looking for an opportunity to get access to the stock.

Before this sale, industrial conglomerate Bogamulia Nagadi held 4.3 billion shares in Tempo Scan, or 95% of the company, according to Bloomberg data. The selling shareholder is subject to a lock-up period of 180 days.

The deal was offered globally, except to onshore US accounts, and the management met with investors in Singapore and Hong Kong this week.

HSBC was the sole bookrunner for the deal.