T

he owners of PT Matahari Department Store (MDS) raised Rp 12.7 trillion (US$1.3 billion) from selling part of their stakes in the major fashion retailer, which saw trading in its stock suspended on Friday over the plan.

According to sources quoted by Bloomberg, MDS shares sold for Rp 10,850 apiece. The firm recently said that its owners, Asia Color Company Limited, controlled by CVC Capital partners Ltd., and Jakarta-listed PT Multipolar, controlled by the Lippo Group conglomerate, sold a maximum of 1.17 billion shares accounting for 40 percent of total MDS shares in a private placement.

Among the investors buying the shares were Temasek Holdings Pte., Blackrock Inc. and Goldman Sachs Group Inc., Bloomberg reported.

Asia Color, which previously held 98.15 percent of MDS, sold a 24.89 percent stake to Multipolar on March 8. Details were not available as to how many shares of MDS would be released.

If both sell the maximum allowed 1.17 billion shares, Asia Color and Multipolar’s combined ownership would be around 58 percent.

Shares in the private placement were offered for around 28 times MDS’ earnings forecast for 2013, according to a source who declined to be named.

MDS booked Rp 5.61 trillion in revenue last year, up 19.4 percent year-on-year, while net profits rose 65.5 percent to Rp 770.8 billion in 2012, up from Rp 465.65 billion.

The company recently announced gross sales in the first two months of 2013 were up 15.2 percent compared to the same period last year.

MDS now has 116 stores covering 750,024 square meters in 50 cities across Indonesia.

The Indonesia Stock Exchange (IDX) suspended trading in MDS during the first session on Friday to avoid unusual fluctuations due to the planned private placement.

The bourse said that the suspension would give time to investors to consider the plan to stabilize MDS share prices after private placement.

According to a file submitted to the IDX, MDS said that 175.07 million shares held by Asia Color would be included in the stabilization plan.

The plan calls for an appointed stabilization agent, PT UBS Securities Indonesia, to use funds raised from the execution of over-allotment in the private placement to purchase MDS shares in the regular market.

Prices set under the stabilization plan will be lower than those in the private placement.

“The stabilization period will be from March 25 to April 23,” the company said.

Strong domestic consumption has benefited retailers in the nation and attracted foreign investors.

“We have an overweight on Indonesia, particularly in sectors that play on domestic consumption,” Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, said. “This is exactly the space Matahari is in. There are opportunities in the retail space as people get richer and spend more.”

Retailers in the nation between 10 percent and 15 percent revenue increases last year, according to Indonesian Retailers Association (Aprindo) deputy chairman Tutum Rahanta.

“The main driver is macroeconomic growth, lifestyle and inflation,” he said.

This year growth is also expected to be at least 10 percent.