IPOs ‘on schedule’ despite bearish market

JAKARTA. A number of companies remain persistent to have their initial public offerings (IPOs) on schedule despite the bearish market in the country that continues to face selling pressures, according to underwriters.

At least 15 new companies are expecting to float their shares on the Indonesia Stock Exchange (IDX) immediately, including Southeast Asia’s largest textile company PT Sri Rejeki Isman and construction firm PT Acset Indonusa that will offer their shares this week and some others that are in the book building period, where they generate, capture and record investors’ demand for shares during an IPO.

“All are on schedule for now,” Febriati Nadira, the executive vice president for corporate communications at PT Mandiri Sekuritas, said on Thursday.

The Jakarta Composite Index (JCI) fell 1.92 percent on Thursday compared to a day earlier. The index has been discounted 11.6 percent from its highest 5,214.98 level achieved on May 20 as foreign investors are pulling out their money over concerns of stimulus cut by developed countries. The JCI increased by 1.9 percent on Wednesday to 4,697 from a dip the day before because of, analysts say, buying acts by investors looking for speculative gains.

Mandiri Sekuritas is one of the two underwriters serving for the offering of transportation company PT Cipaganti Citra Graha, whose book building period runs from June 5 until next Tuesday.

Mandiri Sekuritas is also serving as one of the three underwriters for the IPO of state-owned cement maker PT Semen Baturaja, which closed book building period last Friday and set an IPO price at Rp 560 (5 US cents) for each share, a mid-low level in its offering range of between Rp 500 and Rp 685.

Ferry Budiman Tanja, president director of PT Ciptadana Securities, also said that all IPOs his company was underwriting were on track.

He said that one of Ciptadana’s clients, construction company PT Nusa Raya Cipta, finished its book building period last week, setting its IPO shares price at Rp 850, a mid-high level of its offering range of Rp 750 to Rp 900.

According to Ferry, Nusa Raya is moving to the next stage of its IPO process.

Ciptadana is also serving as the underwriter of Bank Mestika Dharma and banking IT solutions provider PT Multipolar Technology, which is attempting to acquire approval from the capital market authority OJK to allow it to announce its IPO plan to the public and hold a due diligence meeting with prospective investors.

Acset Indonusa also set an IPO price at the middle level at Rp 2,500. The company previously offered its shares in the range of Rp 2,200 to Rp 2,750.

Unlike other companies setting price at the middle level, investment company PT Saratoga Investama Sedaya closed its shares price at Rp 5,500 after the book building period, lower than its offering price of between Rp 6,100 and Rp 7,800, due to the bearish global market.

As the stock market rattles, plantation company PT Dharma Satya Nusantara will carry out a challenging stock trading debut on Friday. Even before the pressure in the stock market, shares in plantation firms were in decline following the uncertain outlook of commodity prices.

In the bond market, construction company PT Intiland Development remains set to issue its Rp 500 billion ($5.06 million) bonds.

“Intiland is running the process,” Ferry from Ciptadana, which is serving as underwriter for the bonds issuance, said.

However, the bearish market has apparently triggered Malaysian Bank CIMB Niaga to hold back its bonds issuance.

On Thursday, the country’s fifth-largest bank by assets Bank CIMB Niaga announced that it had postponed the issuance of Rp 2.5 trillion bonds due to the unfavorable bond market.

“Bank CIMB Niaga management has decided to postpone the bond issuance after a careful consideration of the volatility of the global financial market, which is affecting the situation of rupiah bond market,” finance director Wan Razly Abdullah said in a statement.

The yield of 9.5 percent government bonds due June 2015 dropped 17 basis points to 5.94 percent, the highest since October 2011, according to the Inter Dealer Market Association quoted by Bloomberg. (Raras Cahyafitri, The Jakarta Post)