Indonesia’s Adaro Energy is looking to raise 4.6 trillion rupiah ($291 million) through an initial public offering (IPO) of its thermal coal unit Adaro Andalan Indonesia.
Owned by conglomerate Garibaldi Thohir, Adaro Energy is the world’s sixth-largest coal miner and holds 99.99% ownership of Adaro Andalan. Its stake will be diluted to 90% after the IPO.
According to the IPO prospectus, Adaro Andalan will issue around 778 million new shares, representing 10% of its total capital, at a price range of 4,590-5,900 rupiah per share.
The book-building period is scheduled for November 12-18, 2024. Trimegah Sekuritas has been appointed as the IPO underwriter.
Adaro Andalan’s total assets represent more than half of Adaro Energy’s assets, Reuters reported citing the parent company. The planned spin-off would allow it to seek more competitive funding for green projects, the report added. Adaro Energy is building an aluminium smelter and its hydropower plant is in the pre-construction stage.
Approximately 40% of the funds raised will be allocated to Adaro Andalan’s subsidiary, PT Maritim Barito Perkasa. Meanwhile, 15% will be used to repay loans to PT Adaro Indonesia, and the remainder will be used to settle loans with Adaro Energy Indonesia.
As of June 30, 2024, Adaro Andalan had $2.7 billion in liabilities, comprising $1.5 billion in short-term liabilities and $1.2 billion in long-term liabilities.
Adaro Andalan reported a net profit of $922 million in the first half of 2024, an increase from $804.7 million in the same period last year. However, revenue decreased by 18.4% to $2.65 billion in the first half of 2024, compared to $3.25 billion in the corresponding period of the previous year.
Founded in 2004, Adaro Andalan operates as a holding company with core businesses in palm oil and rubber plantations. The company also has subsidiaries in thermal coal mining, logistics, land asset management (Adaro Land), water management (Adaro Water), and investment (Adaro Capital).
Adaro Andalan’s thermal coal operations include seven assets across South Kalimantan, South Sumatra, East Kalimantan, and Central Kalimantan. As of June 30, 2024, the company produced 32.47 million tonnes of coal, distributed both domestically and internationally to markets in China, Malaysia, South Korea, India, Hong Kong, Japan, Bangladesh, the Philippines, Thailand, Vietnam, Singapore, and New Zealand.
Bisman Bhaktiar, the Executive Director of Law and Mineral Studies (PUSHEP), said that Adaro Andalan remains part of the Adaro Group, which gives the company confidence in raising a significant amount from the Indonesian IPO market. He added that Adaro’s energy and mining business has promising future prospects, which further enhances the value of the company’s IPO.
Adaro Andalan’s IPO comes on the heels of PT Pertamina Geothermal Energy Tbk, PT Harita Nickel Tbk, PT Amman Mineral Indonesia Tbk, and PT Merdeka Battery Materials Tbk which successfully raised millions of dollars in their Indonesia IPOs.
Indonesia Stock Exchange (IDX) President Director Iman Rachman told the media that there will be three major IPOs before the end of this year. With Adaro Andalan’s IPO, two more remain in the lineup.
IDX reported that 36 companies had been listed on the exchange as of November 8, 2024, with a total fundraising of 5.42 trillion rupiah. There are 29 companies in the IDX IPO pipeline, set to list either this year or next, 17 of which have assets over 250 billion rupiah.