Singapore-listed Indofood Agri Resources has raised the maximum S$422.5 million ($270 million) it sought from a fully-marketed share offer that will lift its freefloat to 25%, according to a release issued by the company yesterday.
The announcement came after sources said the integrated palm oil producer, which is based in Indonesia, had attracted demand for more than 20 times the shares on offer from over 200 investors. The majority of the demand came from Southeast Asia and Hong Kong and included a lot of private banking investors. But one source says as much as 20%-25% of the interest was generated from Europe and the UK.
ôSome of the demand came from people who were already familiar with Indofood, but many of the investors were new to the company. The Indonesian exposure through the Singapore Stock Exchange was regarded as quite attractive,ö the source says.
IndoAgri had been required to increase its public float and broaden its number of shareholders after it listed on the Singapore exchange through a reverse takeover that was completed in January. Prior to the share sale its Jakarta-listed parent, instant noodle maker Indofood Sukses Makmur, held 98.7% of the stock.
The company offered to sell between 141 million and 338 million new shares with the lower end representing 12% of the enlarged company, or the minimum freefloat required following a backdoor listing. Given the strong demand, however, the company chose to sell the full 338 million, or 25% of its issued share capital.
The transaction was priced at the top end of the S$0.90 to S$1.25 indicative range, which will give the company a market cap of $1.1 billion by the time it resumes trading on February 14. IndofoodÆs stake will fall to 73.9%.
According to sources, the price range translates into a post-money 2007 earnings multiple of just over 17 times, which is roughly in line with other Indonesian producers of agricultural-based products like Indofood, Astra Agro Lestari, PT SMART Corp and PT Bakrie Sumatera Plantations, which trade at an average 15.5 times 2007 earnings.
Indofood, which aside from noodles also makes flour, baby food, coffee and snacks, trades at the upper end of the that group at a PE multiple of 20 times after soaring 32% since mid-January. Those gains are seen to be largely related to the IndoAgri spin-off.
The split between institutional and retail investors wasnÆt available last night, but the retail tranche was expected to account for 5%-10%. Another 1.5% has been allocated to Hong Kong-listed First Pacific, who will distribute them among its shareholders. First Pacific is the controlling shareholder of Indofood.
CIMB-GK Securities, Credit Suisse and Kim Eng Securities were joint bookrunners for the offering.
IndoAgri is active throughout the entire palm oil value chain and is one of IndonesiaÆs leading producers of branded edible palm oils and fats. About 80% of the companyÆs revenues come from its cooking oil and fats division, making it not so much a play on crude palm oil prices (which has driven up share prices in the sector in recent months) as it is a consumer stock.
Its earnings drivers are also primarily related to the macro economic performance of Indonesia and the increasing wealth of the population and the company is expected to generate close to 30% annual Ebitda growth in the coming few years, syndicate analysts project.
However, the company is expanding its oil palm plantations and has a long-term objective to have 250,000 planted hectares by 2015, which in the long-run will allow it to benefit from rising palm oil prices and increasing demand for CPO from bio-fuel producers. IndoAgri currently owns 130,000 hectares of plantation land, of which about half is planted.
At a first stage, the company will plant 70,000 new ha of palm trees by 2009 with the primary aim of becoming self-sufficient in terms of raw material. At present it uses virtually all the crude palm oil it produces to make edible and industrial oils and margarine further down the value chain and still has to buy about 50% of its CPO needs.
It is also looking for acquisitions in order to reach its long-term plantation target.
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