Diversified holding company PT Multipolar (MLPL) says it will sell a 26.1 percent stake of subsidiary PT Matahari Putra Prima (MPPA) to Singapore investment company Temasek Holdings Ltd.
Eddy Handoko, Multipolar’s president director, said that the company and Temasek subsidiary Anderson Investments Pte. Ltd. signed an exchangeable rights subscription agreement in January, allowing Anderson to buy the stake in Matahari Putra Prima, which was reportedly worth US$300 million.
Multipolar, which owns 50.23 percent of Matahari, the operator of the Hypermart and the Matahari store chains, earned Rp 9.1 trillion ($937.3 million) in net sales as of September, while Matahari earned Rp 7.9 trillion.
However, Eddy said that the agreement would not shake the position of Multipolar as the major shareholder in Matahari. “We have no intention of diluting our shares in Matahari, because we want to remain the controlling shareholder,” he said recently.
He added that Anderson would instead acquire part of the 43.7 percent of Matahari shares that were previously released to the public.
“We have appointed PT Ciptadana Securities as the underwriter for this transaction,” Eddy said, giving the firm two years to acquire the needed shares from the public. “We feel that two years is ample time.”
Eddy said that underwriter would pay Rp 2,050 per share for MPPA shares, above the Rp 1,740 share price at the end of trading on Tuesday on the Indonesia Stock Exchange (IDX), which was also up 6.7 percent from its opening.
Eddy said that there would be no massive shake up of the management or the board of Matahari due to the agreement, although he added that Anderson had requested that it be allowed to appoint several commissioners and directors.
He pointed out that the entrance of Temasek’s subsidiary would give Matahari access to fresh funds and knowledge of best business practices.
“This will help sharpen Matahari’s business in the retail sector,” Eddy said.
He said that Matahari would seek to improve its operational efficiency, such as by improving distribution networks to ensure higher sales volume at its 80 Hypermart outlets.
Eddy said that Matahari planned to open up to 20 new outlets this year, after establishing 17 new outlets last year. “The amount funds that will be needed to open these new outlets will be Rp 1 trillion, at least.”
Eddy said that the new outlets would be located in Jakarta, Bali as well as cities in western Indonesia such as Bau Bau, the main city of Buton Island near Kalimantan and Dumai in Riau. “A majority of the new outlets will operate outside of Jakarta because rapid economic growth, especially in the retail sector, is in those areas,” Eddy said.
The gross domestic product (GDP) of Indonesia grew by 6.23 percent last year, a growth rate that analysts expect to persist this year.
He added that improvements in purchasing power were accompanied by a sharp rise in economic fortunes outside Jakarta.
“We have chosen areas closest to the rising middle class, who now have the disposable income to buy two shampoo bottles, for example, instead of just one in the past,” he noted.
MLPL shares closed at Rp 415 on Tuesday, 7.7 percent lower than their opening price.
MPPA previously agreed to release non-core assets, such as Timezone, Times Bookstores, and its restaurants and property businesses, by selling wholly owned subsidiaries PT Matahari Pacific and PT Nadya Putra Investama to Multipolar.