Harum Energy plans to raise up to Rp 4 trillion from IPO

Coal miner Harum Energy expects to raise between Rp 3.35 trillion and Rp 4.09 trillion (about US$454 million) from the sale of its shares to the public later this month, underwriters say.

Ferry Budiman Tanja, the president director of Ciptadana Securities, one of two underwriters of the Harum IPO, said in Jakarta on Thursday that the coal mining company would sell its shares for between Rp 5,000 and Rp 6,300 a piece.

The Harum share’s price-to-earnings (PE) ratio stood at between seven and nine times the company’s projected earnings for 2011, he said.

“This is a discounted price because the average PE ratio is between 10 and 11,” Ferry added.

In its prospectus released Thursday, Harum says it plans to sell 650 million shares, representing 24 percent of its total stake, during the offering period, which began Thursday and will run until Sept. 15.

The shares will be listed on the Indonesian Stock Exchange (IDX) on Oct. 6.

Ferry said the company planned to do a roadshow in Asia and Europe next week to promote the shares to foreign investors.

Iman Rahman, an investment director at Mandiri Securities, the other underwriter of the IPO, said the company would take a greenshoe option by selling 65 million more shares during the IPO.

A greenshoe option allows underwriters to sell investors more shares than originally planned by the issuer. The option, also referred to as an over-allotment option, is normally implemented if demand for a security issue is higher than expected.

In Harum Energy’s case, underwriters would be given the opportunity to manage the greenshoe shares, which would be used to prevent share prices from falling below the IPO price, he said.

Harum has also appointed Goldman Sachs and Deutsche Bank as international underwriters for the offering.

After the IPO (without calculating the greenshoe option), Harum will be 75.84 percent owned by Karunia Bara Perkasa, 0.09 percent by Bara Sejahtera and 24.07 percent by the investing public.

“The proceeds from the IPO will be used to expand Harum Energy’s coal business,” Harum president director Ray A. Gunara said.

Ray went on to explain that of the sum, $50 million would go toward subsidiaries’ coal production, $30 million to buy tug boats and barges to upsize carrying capacity and the remainder would be for exploration and drilling, as well as to pay back loans.

“Harum Energy borrowed $80 million from DBS in June,” he said.

Harum posted a revenue of Rp 894.7 billion in the first quarter of this year, with net profits of Rp 134.1 billion in the same period.

Its coal production in the period ending March 31 reached 1.1 million tons.

In 2009, the company booked a full-year revenue of Rp 4.6 trillion and net profit of Rp 767.5 billion. (est)