Exclusive: Indonesia’s GMF AeroAsia sets capex at $400m to hit $1b revenue by 2022

Indonesian currency Rupiah on hold by a cashier. Photo: Reuters

IPO-bound GMF AeroAsia, a unit of Indonesian national carrier Garuda Indonesia, is setting aside $400 million for five-year capital expenditure (capex) to help the company double its revenue and hit $1 billion in revenue by 2022, its president director told this portal.

The company is also eyeing at least 10 joint ventures (JVs) with international firms following the IPO.

GMF is poised to go public by the end of the third quarter this year. The company aims to raise between $200 million and $300 million in what could be the largest IPO in the maintenance, repair and overhaul (MRO) industry in 17 years. The last MRO firm going public in the region was SIA Engineering, a unit of the Singapore Airlines Group, where it raised $200 million from the offering.

Mandiri Sekuritas has been named as lead coordinator of four underwriters, including BNI Securities, Bahana Securities, and Danareksa. About 20-30 per cent of the company’s enlarged capital will be up for offering.

The plan is to hold the public listing in September, and list the shares on the Indonesian Stock Exchange (IDX) in October. The Indonesian Financial Services Authority (OJK) has been notified, and is expected to release the effective statement this week.

Newly appointed GMF president director Iwan Joeniarto said proceeds will be used for expansion and capital expenditure, as well as to strengthen capital structure. The firm currently holds 32 per cent of domestic market share, and is looking to boost capacity and raise competitiveness.

“We have monopolized the local market but not yet the regional one as we have plenty of global competitors. That’s why we see this IPO as a great opportunity to expand further. We want to boost capabilities and capacity,” Joeniarto said.

“Becoming a public company will help us grow into a much, much better company: more liquidity, more transparency, more openness. There is nothing you can hide once you go public, we’ll be ready to be audited anytime. This will change our mindset, and everyone will strive to deliver the best,” he added.

He said the firm would like to join hands with a strategic investor, but the short period of time for the IPO offers a better chance of attracting only financial ones.

“If we may hope then we want to get a strategic investor to bring along know-how and expertise. But because this is an IPO where anyone can participate, the bulk will only be public and financial investors,” Joeniarto said.

GMF claims to be the number one MRO company in Indonesia. It has a double digit profit margin and steady growth of 20 per cent since 2014. EBITDA margin is reported at 18 per cent. The firm booked $200.2 million in revenues during the first semester of 2017, or nearly half of the targeted revenue for this year of $424 million.

Growth is expected to remain high as Indonesian airlines’ fleet increases by 9 per cent each year, while value for maintenance raises by 11 per cent. India’s fleet has increased by 13 per cent, while China’s at 11 per cent. Globally, airlines fleet grows by 5 per cent.

Starting out in 1949, GMF AeroAsia originated as the Technical Division of Garuda Indonesia Airlines at the Kemayoran and Halim Perdanakusuma airports in Jakarta, Indonesia. In 1984, GMF AeroAsia was relocated to Soekarno-Hatta International Airport and rebranded itself as the Division of Maintenance & Engineering (M & E), which eventually developed into an independent business unit.

Subsequently in 1998, the M & E Division transformed into the Strategic Business Unit (SBU-GMF), handling all Garuda Indonesia’s fleet maintenance activities, thus honing its competitive edge. Eventually in 2002 SBU-GMF was spun off from Garuda Indonesia, and officially became an independent entity under the name of PT Garuda Maintenance Facility Aero Asia.

The MRO industry is generally seen as much more stable than the industry it’s supporting – the airline industry – as it doesn’t rely much on the volatility of fuel price.

In 2011, Garuda Indonesia’s shares famously plunged 17 per cent on the first day of its listing, and have never picked up ever since. It sold 6.33 billion shares and raised Rp 4.75 trillion ($355 million) through the IPO, about half of it subscribed by the underwriters.

This year, AirAsia Indonesia is hoping to break the curse. It has reiterated that it plans to list on the Indonesia Stock Exchange before the end of this year. The budget airline’s initial public offering (IPO) plan was earlier shelved in mid-2016.

AirAsia Group CEO and founder Tony Fernandes said the firm will appoint foreign and local underwriters for the share sale. Proceedings from the IPO will be used to expand its business in Indonesia.

AirAsia has been pushing for its Indonesian and Thai units’ IPOs for a few years now. There had been reports that Indonesia AirAsia would be merged with sister company Indonesia AirAsia X before listing to solve issues regarding negative equity. It is unclear whether the merger plan is still on the table.

The company has also named Indonesian actress Raline Shah as independent commissioner in preparation for its listing.

Also Read:

Indonesia AirAsia to Merge with Indonesia AirAsia X

AirAsia reiterates IPO plans for Indonesia unit, appoints new independent commissioner

Garuda Indonesia eyes $1b UK Export Finance loan to expand fleet

Garuda Indonesia inks deal to buy 14 aircraft from Airbus for $4b

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.