Sriboga expects to raise $72m from IPO to finance expansion
The Jakarta Post
Major flour producer and food chain operator PT Sriboga Raturaya plans to float its shares on the bourse this year, aiming to generate up to Rp 700 billion (US$72.11 million) to support its expansion plans.
“We will offload shares that will account for between 10 percent and 25 percent of our enlarged capital, depending on the situation,” president director Alwin Arifin said during a press conference on Tuesday in Jakarta. The firm would use around 70 percent of its initial public offering proceeds on its expansion activities and the remaining to pay debts totaling Rp 200 billion that would mature this year, Alwin added.
Sriboga, which operates Indonesia’s third largest flour mill and popular fast food chain Pizza Hut, has yet to appoint underwriters for the offering and will need to conduct a due diligence, according to Alwin.
Set up in 1998, Sriboga currently manages three key businesses: wheat and bread production, franchise restaurants and wheat flour distribution. Wheat flour sales and restaurant businesses made the biggest contributions to its revenue, which this year is targeted to reach Rp 4.5 trillion, up by 18.42 percent from last year.
On Tuesday, Sriboga, through its subsidiary Sriboga Flour Mill, completed a deal that will prompt Japan’s major flour maker Nitto Fuji
Flour Milling Co., Ltd., a subsidiary of diversified group Mitsubishi Corporation, to control 10 percent of its stakes worth $30 million, gradually within three years.
Alwin said that the acquisition would allow Sriboga to benefit from Mitsubishi’s excellent network in the domestic market, where the Japan-based firm had diversified its business in the downstream food industry to produce biscuits and bread, as well as in Asian market.
“We expect to raise our share in the domestic market to 10 percent in the next few years, from 7 percent at present,” he said.
Indonesia, Southeast Asia’s largest economy, has seen a surge in the demand for foods other than its staple food — rice — as more than half of its population has joined the emerging middle class. Consumption of wheat flour-based food has significantly increased in the recent years, but industrial players say there is still enormous room for growth along with the stronger purchasing power of its population in the future.
At the same time, as part of its overseas expansion scheme, the firm would also add allocation for exports to 10 percent from 5 percent, Alwin added. It currently markets flour to several Asian countries, including Malaysia, Singapore, South Korea and Timor Leste.
To tap into the new opportunities, Sriboga will upgrade its annual flour mill capacity to 750,000 tons within two years, from the current 570,000 tons, according to Alwin.
Apart from enlarging its flour business, the firm is also preparing for other expansion activities in the restaurant business, including developing new franchise food outlets, which were completed through a franchise license purchase agreement with Marugame Udon, one of Japan’s popular food chains.
Owned by Japan-based Toridoll Corporation, Marugame Udon operates restaurants serving Japanese cuisine in many countries across the globe, including Australia, Hong Kong, Korea, Russia, Taiwan and the United States.
Stephen James McCarthy, the president director of the firm’s subsidiary, Sriboga Marugame Indonesia, said that it would spend roughly
Rp 150 billion to build 38 Japanese udon (noodle) restaurants in the country’s major cities within five years.
“The restaurants will be located in five cities: Jakarta, Surabaya, Denpasar, Bandung, Medan,” he said.
As of now, Sriboga through its subsidiary Sari Melati Kencana, operates 207 Pizza Hut restaurants and 70 Pizza Hut Delivery outlets.
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