Re-IPO in Astra Otoparts raises $287 million

The secondary share sale in the Indonesian car parts maker attracts robust demand, with Japan’s Toyota Tsusho taking about one-third of the deal. The stock jumps after the transaction.

Astra International, a majority shareholder of Astra Otoparts, has raised Rp2.8 trillion ($287 million) from a fully marketed secondary share placement in the Indonesian automotive parts company, after fixing the price near the top of the range, a source said yesterday.

The placement consisted of 100% secondary shares, which means all the proceeds will go to the parent company. After the transaction, Astra Otoparts’ free-float will increase to about 20% from 4.3%. Due to the limited free-float and thin trading volumes prior to the offering, the share sale was conducted in the same way as an IPO, with a full management roadshow and a price range — the kind of deal commonly referred to as a re-IPO. The books opened last Wednesday (May 22) and closed on Tuesday this week.

Toyota Tsusho, which is the trading company of the Toyota group and a strategic partner of the Astra group, said it bought Rp886 billion worth of shares in the transaction. That represents about 31% of the deal and 4.9% of Astra Otoparts’ total share capital.

“Through this investment, Toyota Tsusho aims to further strengthen its partnership with Astra Otoparts, and further expand its auto-related businesses in Indonesia, where strong growth in the auto market is expected,” the company said in a Japanese statement yesterday.

Astra International sold 754.5 million shares in Astra Otoparts at Rp3,750 each. Excluding the investment by Toyota Tsusho, the offering amounted to about $197 million. About 30% of that was allocated to domestic institutions, while the remaining 70% went to international accounts, the source said.

The deal accounted for 15.7% of the company and was marketed at a price between Rp3,250 and Rp3,850 per share, which translated into a 2014 price-to-earnings ratio of 11.5 times to 13.7 times. The final price represented a 2014 P/E multiple of 13.3 times.

The company has no direct comparables, but investors looked at other listed auto-related companies, such as Indomobil Sukses Internasional and Selamat Sempurna, as well as Malaysia’s UMW Holdings, which were trading at 2014 P/E multiples of around 11.5 times, 14.2 times and 14.3 times, respectively, at the time of the deal launch, according to Bloomberg data.

The share sale attracted robust demand and saw strong support from long-only anchor investors and existing shareholders of Astra International, the source said. In all, more than 100 investors participated in the transaction, which was multiple-times subscribed at the final offer price, the person also noted.

Astra International held a 95.7% stake in Astra Otoparts prior to the transaction, meaning its holding will be reduced to 80%, according to another source.

After the pricing, Astra Otoparts’ share price jumped 11.1% yesterday to end at Rp4,250. That puts it well above the placement price and takes its year-to-date gain to nearly 20%. The Jakarta Stock Price Index, which was up 0.5% yesterday, has climbed about the same amount so far this year.

Astra Otoparts is a producer and distributer of spare parts for cars and motorcycles and ranks as Indonesia’s biggest automotive component company, according to its website. After a number of transformations and corporate name changes, Astra Otoparts was established in 1997 and registered its shares on the Jakarta Stock Exchange (now the Indonesia Stock Exchange) the following year.

The company makes parts for manufacturers such as Toyota, Honda, Yamaha, Kawasaki and Hino, according to its website. It also makes replacement parts that are distributed throughout Indonesia, as well as to more than 40 countries around the world.

Astra International is one of Indonesia’s biggest national companies and has six business segments: automotive, financial services, heavy equipment and mining, agribusiness, infrastructure and logistics, and information technology.

HSBC, Mandiri Sekuritas and UBS arranged the share sale.

The sell-down came as investors continue to like the consumer growth story in Indonesia. In March, private equity firm CVC Capital and the other controlling shareholders raised $1.3 billion from a fully-marketed follow-on share sale in Matahari Department Store.

Before Astra Otoparts, Indonesia had seen about $2.5 billion of ECM transactions this year, of which about $2.1 billion had come from follow-on deals, according to Dealogic. That compares with an overall ECM volume of $1 billion during the same period last year.

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