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MARKET AND STOCK TRADING

Markets cheered by acquisitions

Tuesday, 14 February 2017 | Dityasa H Forddanta

JAKARTA. Indonesia’s markets are still attractive for business expansions. The significant market opportunities have attracted some corporations to prepare for launching business expansions.

In the quarter I-2017, Star Energy gave signs that the company are ready to settle the acquisition processes of two assets of Chevron, namely geothermal power plants in Indonesia and the Philippines.

Star Energy, which is owned by Prajogo Pangestu through Barito Pacific Group, has just obtained an amount of US$ 660 million loans from a syndication of Credit Suisse, DBS, and Maybank to finance the acquisition.

Previously, Star Energy had obtained an amount of US$ 1.25 billion loans from several banks shortly after the signing of sale and purchase agreement on the acquisition ahead of the end of 2016. According to KONTAN’s record, Star Energy will pay off the acquisition and conduct the assets handover at the end of quarter I-2017.

Aside of the acquisition of Chevron’s assets by Star Energy, the markets previously have recorded an acquisition plan of PT Bank Permata Tbk or BNLI’s shares by the Chairman of Mayapada Group Dato Sri Tahir.

Meanwhile, the acquisition of PT Eagle High Plantation Tbk (BWPT) by the subsidiary of Federal Land Development Authority (Felda), FIC Properties Sdn Bhd worth US$ 505.4 million is also almost completed.

Actually, those massive acquisitions had been planned long ago. For an example, the acquisition process of BWPT took one year to show a significant progress. “The closings, which have just been massive in the first quarter, may indicate that the uncertainties have been reduced,” analyst at Koneksi Kapital Alfred Nainggolan told KONTAN, Monday (13/2).

Recently, the investors can start measuring the direction and the risks of their investments, after the US (United States of America) Donald Trump issued his policies and some related significant data to the investment.

Low valuation

Analyst at Panin Sekuritas Frederik Rasali said, the performance of some companies have been under pressure due to the unfavorable economic conditions. Therefore, the valuations of those companies were eroded. Some investors saw this as an opportunity and decided to acquire the shares of those companies.

This year, the domestic economy will improve, despite would have not yet fully recovered. In other words, the discount trend will continue so that the acquisition trend is predicted to be more massive in this year. “Let alone, Indonesia’s fundamentals remain attractive, mainly in the real sector,” Frederik said.

In terms of fundamental prospect, Alfred measured that commodity sector would be the potential target of acquisition. Evidently, BWPT and Chevron have business in the commodity sector.

The commodity price has long been under pressure so that their performances have been decreased. In this case, the companies’ values have been discounted and attracted the investors’ penetration.

Let alone, Trump’s economic policies tend to boost energy consumption. In this case, the economic growth is directly proportional to energy consumption. “While the economy is growing, energy consumption will increase. Therefore, no doubt, this sector is attractive,” Alfred said.

The acquisitions may increase the shares’ prices. Subsequently, this will boost Jakarta Composite Index (JCI). (Muhammad Farid/Translator)

Reporter: Dityasa H Forddanta
Editor: Barratut Taqiyyah