(Bloomberg) – PT Pertamina Geothermal Energy slumped in Jakarta during its trading debut after a 9.06 trillion rupiah ($596 million) IPO, the largest in Indonesia last year.
Most read by Bloomberg
Shares fell as much as 6.9% to trade at 815 rupiah on Friday. A 25 percent stake in the company went public after selling 10.35 billion shares at 875 rupiah each, within the lower range of the offered range.
Such a drop on the first day does not bode well for the government’s planned listings this year. The Company is the geothermal unit of energy company PT Pertamina and the first in a series of mid- to large-scale state-owned company offerings planned for 2023.
“Overall, on a positive note, Pertamina Geothermal has long-term, dollar-denominated contracts and has low margin volatility, providing stability for future profits,” said Sumeet Singh, Head of Equity Research, IPOs and Placements at Aequitas Research Pvt, of published on Smartkarma.
“However, it also lacks growth, which makes it almost like buying a government bond, and so we wouldn’t be willing to buy it at an earnings yield well above the 10-year risk-free rate,” Singh said .
Southeast Asia’s largest economy is selling stakes in state-controlled companies to raise funds while reducing its reliance on government budgets. The IPO is the second largest in Asia since early 2023 and the third largest globally.
Deputy State Enterprise Minister Pahala Mansury declined to comment on Geothermal’s share price, citing the company’s strong fundamentals.
The IPO attracted major investors including Masdar, the UAE’s main renewable energy company, according to a company statement on Friday.
The story goes on
Prior to Geothermal’s debut, only 29% of the 21 companies listed in Jakarta over the past decade, having raised over $100 million, ended their debut session below the stock market price, according to data compiled by Bloomberg. The average drop for these companies on their inception day was 8.6%.
PT Garuda Indonesia Persero Tbk, the national carrier that began trading in 2011 after a $524 million IPO, plunged 17% in its first session. In contrast, state-controlled company PT Waskita Beton Precast rose 10% when it debuted in September 2016 after its $395 million IPO.
Solid line
Pertamina Geothermal’s IPO is the largest in Jakarta since GoTo Group’s listing in April 2022 at $959 million. The strong supply of deals in the Indonesian capital this year contrasts with a slow start in Asian hubs like Hong Kong, Seoul and Singapore.
PT Pertamina Hulu Energi, Pertamina’s upstream unit, and plantation company PalmCo. will go public next this year.
Ahead of the geothermal company’s debut on Friday, only four alternative energy companies have sold shares through IPOs in Indonesia since 2013, raising total proceeds of about $40 million, data shows.
PT CLSA Sekuritas Indonesia, Credit Suisse Group AG and PT Mandiri Sekuritas were the arrangers of the IPO.
(Updates stock performance and adds comments to fourth paragraph.)
Most Read by Bloomberg Businessweek
©2023 Bloomberg LP
Comments are closed.