Indonesian re-IPO

Tempo Scan shareholder to sell up to $140 million of stock

The deal aims to increase the free-float in the Indonesian pharmaceutical and consumer products company from the current 5%. Meanwhile, Global Mediacom is getting ready to spin off its pay-TV unit.
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Tempo Scan: treating Indonesia's back pain and other ailments since 1953
<div style="text-align: left;"> Tempo Scan: treating Indonesia's back pain and other ailments since 1953 </div>

The controlling shareholder of Tempo Scan Pacific is aiming to sell between Rp1,250 trillion and Rp1,325 trillion ($133 million to $141 million) of stock in the Indonesian pharmaceutical and consumer products and cosmetics company to help boost the portion of shares held by public investors.

The stock is highly illiquid at the moment and on average trades only about $70,000 per day, a source said. The placement (including the upsize option) could increase the free-float to as much as 20% from just 5% at present, which means the fully-marketed offering is almost like a re-IPO of the company, he added.

Bogamulia Nagadi, which currently owns the remaining 95%, is offering to sell about 500 million shares, which represents 11.1% of the outstanding share capital. But the deal also comes with an upsize option of a further 175 million shares, which could increase the offering to 15% of the share capital and boost the total deal size to as much as $190 million.

Given that the stock is so thinly traded, the deal is marketed with a fixed price range, as opposed to a discount to the live share price, making it even more similar to an IPO. According to a term sheet, the shares are offered at a price between Rp2,500 and Rp2,650 each. As a reference, that translates into a discount of 0.9% to 6.5% versus Friday’s close of Rp2,675.

The consumer sector has been highly sought after across Southeast Asia in recent months and so far there has been good interest for this deal too. According to the source, the bookrunners had a shadow book that was close to the size of the base deal before the bookbuilding started yesterday.

As of the end of March, industrial conglomerate Bogamulia Nagadi held 4.278 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.

As per the current timetable, the order book will close on Thursday and the pricing is expected later that same day. The management met with investors in Singapore yesterday and will continue to do so today before moving on to Hong Kong on Wednesday and Thursday. The deal is offered globally, except to onshore US accounts. HSBC is the sole bookrunner.

Tempo Scan’s share price fell 1.9% yesterday to Rp2,625. So far this year, it has gained about 3%, building on a 50% jump in 2011. However, as election results in France and Greece sparked further worries about the eurozone’s ability to solve its debt crisis, Asian stock markets declined sharply yesterday. Indonesia’s benchmark index lost 1.4% but is still up more than 8% this year, on top of a 3.3% gain in 2011.

Elsewhere in Indonesia, MNC Skyvision, a pay-TV operator owned by media group Global Mediacom, started investor education last week for an initial public offering that will give investors yet another chance to play the country’s consumer demand story.

Depending on the feedback, the company will likely start the roadshow towards the end of this month, with an eye on listing in June, a source said. The deal size could be up to $300 million.

Global Mediacom is the largest and only integrated media group in Indonesia.

J.P. Morgan and Morgan Stanley are joint bookrunners.

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