Indonesia’s steel producer Gunung Raja Paksi to raise $78m via IPO

Photo by Karan Bhatia on Unsplash

Indonesia’s steel producer Gunung Raja Paksi is planning to raise up to $78 million (Rp 1.12 trillion) in an initial public offering (IPO) at Indonesia Stock Exchange (IDX) in September, the company announced on Tuesday.

Established in 1990, Gunung Raja’s areas of work include steel smelting, furnace, and steel rolling.  The Jakarta-based company has a production facility in Cikarang, West Java, which is built across 200 hectares. It has an annual production capacity of around 2.8 million tons.

The company also exports its steel to the US, Philippines, Malaysia, and Australia. It booked $212.13 million in sales last year, down 15.18 per cent from the year before.

“We see great potential in this industry, which comes from the growth of steel consumption in Indonesia due to the government’s massive infrastructure development in building toll roads, ports, airports, and railroads,” Gunung Raja Paksi chief executive Alouisius Maseimilian said in a statement.

Maseimilian also said Indonesia’s steel industry has room to grow since steel consumption in the country is low, while steel production capacity is modest.

The company is offering 1.24 billion new shares, equivalent to 10.21 per cent of its enlarged capital. Gunung Raja is looking to offer shares at Rp 825 and Rp 900 apiece.

The book-building period started on 3 September and will last till September 5, before it sells its shares to investors on September 12-13. The company will list its shares on the IDX on September 19.

The company will use most of the IPO proceeds to pay the debt it amassed after the acquisition of another local steel producer Gunung Garuda for $96 million. Meanwhile, a part of the proposed funding will also be used to meet the needs of its working capital.

Two local-based brokerage firms Kresna Sekuritas and UOB Kay Hian Sekuritas have been appointed as the underwriters for the IPO.