Cikarang Listrindo seals rare utilities IPO

The Indonesian independent power producer raises $272 million from the first IPO out of the country's power and utilities sector since 2008.

Independent power producer Cikarang Listrindo will become the first utilities company to list on the Indonesian Stock Exchange in eight years after setting a Rp3.6 trillion ($272 million) pricing for its initial public offering on Friday.

The most recent new issue in the power and utilities sector was Indika Energy’s $298 million IPO, completed in June 2008.

Bankers familiar with the situation told FinanceAsia the order book for Cikarang Listrindo was well oversubscribed by predominantly foreign, long-only investors, including Matthews International Capital Management and another foreign anchor investor.

Despite some evidence of price sensitivity during bookbuild, the company was able to push the final price off the bottom of the Rp1,430 to Rp1,930 indicative range.  Final pricing was settled at Rp1,500 per share, implying a pre-shoe market capitalisation of $1.82 billion that equates to 7.3 times EV/Ebitda for the 2017 financial year.

On a price-to-earnings basis Cikarang Listrindo is valued at 12 times 2017 earnings. As the company plans to distribute at least 60% of its profit in dividends from 2017 onwards, the final price implies a 5% dividend yield next year.

Final allocation was heavily skewed towards foreign and long-only investors, who took up close to 90% of the orders, according to a banker familiar with the situation. The remainder was placed to multi-strategy and hedge funds, the banker added.

The two anchor investors ended up taking over half of the deal at the final price.

Bankers said the strong foreign demand for Cikarang Listrindo shares showed that Indonesian equities remained one of the bright spots in the region. From a macroeconomic point of view, Indonesia remains also one of the fastest growing economies in Asia despite full-year GDP growth slowing to 4.8% last year.

“Foreign participation increases liquidity in the Indonesian stock market and also helps new issuers tap the equity market for funding,” a Southeast Asia ECM banker told FinanceAsia.

Cikarang Listrindo’s success revived hopes that dealmakers would press on with some of the IPOs that were put on hold last year due to market volatility, including those of property developer Summarecon Investment and insurance-to-real estate conglomerate Gunung Sewu.

Cikarang Listrindo is set to list on June 14 as the country's first public independent power producer.

CitigroupDeutsche BankUBS, and Indo Premier Securities are joint bookrunners on the Cikarang Listrindo IPO.

¬ Haymarket Media Limited. All rights reserved.

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