Indonesian property developer Puradelta Lester (Deltamas) has initiated investor education ahead of an initial public offering (IPO) estimated to raise roughly $200 million, said a report in FinanceAsia,
This capital would fund industrial parks infrastructure, with up to 10.8 billion primary shares — approximately 20 per cent of the total enlarged share capital — on offer in the industrial estate developer.
“The figure (for the IPO) is not confirmed yet because it depends on the valuation” said Hermawan Wijaya, a spokesman for Puradelta, in a statement to Reuters.
According to FinanceAsia, bookrunners for the international tranche are – Citigroup, CLSA, Macquarie and Nomura – who are working collaboratively. Meanwhile. Macquarie, Sinarmas Sekuritas and CLSA are the the domestic leads within Indonesian.
This is the company’s second attempt to come to market after withdrawing from an earlier IPO in 2013 due to a weak market.
According to term sheets obtained by FinanceAsia, 60 per cent of the IPO proceeds will fund infrastructure development of roads, electricity and water. This is in addition to residential housing, parks and other facilities.
Deltamas will subsequently sell assets to various industries for factory development, with 30 per cent of capital allocated for future land acquisitions. About 10 per cent of IPO capital will be retained for working capital, according to the term sheet.
Deltamas is a subsidiary of Singapore-listed Sinarmas Land. Japan-based Sojitz Corporation, a general trading firm or sogo shosha with businesses operating across different verticals (e.g. machinery, energy and metals, chemicals and consumer lifestyle) holds a 25 per cent stake in Deltamas.
An IPO will see Sinarmas Land’s stake decline to 40 per cent from its current 50 per cent. Sojitz Corp’s stake will drop to 20 per cent. This is attributed to share dilution, as opposed to a trade sale of shares in the course of the IPO, according to industry insiders familiar with the deal.
Deltamas Assets & Future Developments
Deltamas owns about 3000 hectares of industrial land along a major highway in the Greater Jakarta area. The business concept involves developing of self-sustaining industrial estates under the Kota Deltamas brand. Current plans call for approximately half of the land being zoned for industrial use, while 25 per cent has been allocated for commercial properties, schools, a hospital and other public spaces and a quarter for residential properties.
This IPO capitalises on the ongoing investment observed in Indonesia’s infrastructure space, with the Jokowi administration allocating capital for developing road and port infrastructure. The current ports upgrade scheme is unprecedented, and includes the modernisation of existing ports and the construction of new ports to ease the burden imposed by increased demands of the growing Indonesian economy.
The increased foreign direct investment (FDI) flow, particularly in manufacturing, is directly benefiting industrial estate developers like Deltamas and Bekasi Fajar Industrial Estate, which is located in West Java and launched in 1989.
Negative factors affecting Deltama’s IPO is the recent decline in Indonesian consumer confidence, despite booming investment across multiple sectors, especially the e-commerce boom in Indonesia and the wider region.
Bank Indonesia’s Consumer Confidence Index, based on a sample of roughly 4,600 households in 18 major cities across the country, declined by 3.3 points from February to 116.9 in March. Despite a 10.4 per cent 12-month rise in the Jakarta Stock Exchange Composite Index, year-to-date it is only up 3.3 per cent. This is an unimpressive rise, given the buoyancy of regional capital markets and the numerous investments that are being made in infrastructure assets by PE firms.