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utomotive distributor PT Mitra Pinasthika Mustika (MPM) is planning to raise up to Rp 2.03 trillion (US$211 million) from its initial public offering (IPO) later next month.

The company, which is partly owned by private equity firm PT Saratoga Investama Sedaya founded by tycoon Edwin Soeryadjaya, will off-load 1.01 billion new shares, accounting for 28.28 percent of its enlarged capital.

The shares, to be offered from May 21 to 23, will be priced from Rp 1,500 to Rp 2,000 apiece, allowing the company to raise between Rp 1.52 trillion and Rp 2.03 trillion in fresh funds.

The company has appointed PT Morgan Stanley Asia Indonesia, PT Deutsche Securities Indonesia, PT DBS Vickers Securities Indonesia and PT Indo Premier Securities as underwriters for the offering.

'€œWe will conduct road shows overseas, including to Singapore, Hong Kong and London,'€ MPM president director Tossin Himawan said on Friday.

MPM, established in 1987 by the founder of automotive giant Astra International, William Soeryadjaya, will use most of the money raised from the IPO to support expansion through its subsidiaries.

Subsidiary PT Mitra Pinasthika Mulia will use as much as 25 percent of the money raised from its parent firm'€™s IPO to acquire a vehicle leasing firm and another 13 percent to purchase up to 3,000 new vehicles. The company, the main dealer of Honda motorcycles in East Java and East Nusa Tenggara, reported a 12.1 percent increase in motorcycle sales to 735,511 units last year, while the national market saw an 11.8 percent drop in total sales to 7 million units.

Anther subsidiary, PT Federal Karyatama, the producer of lubricant oil Federal Oil, will get 23 percent of the IPO funds to establish factories for the lubricant oil business. MPM will also use 19 percent of the IPO funds, or about Rp 300 billion, to increase its stake in Federal Karyatama to 100 percent from its current 83 percent.

Subsidiary PT Asuransi Mitra Pelindung Mustika will get 8 percent of the funds for its expansion, including for new branches or acquiring other companies.

MPM will use the remaining 9 percent or Rp 150 billion to pay off debts with PT Bank DBS Indonesia and PT Bank ANZ Indonesia and the remainder as working capital. This year, MPM has allocated Rp 1.2 trillion in capital expenditure.

MPM is expecting to list the shares on the Indonesia Stock Exchange (IDX) on May 29. A number of transactions will follow MPM'€™s listing, including a share-purchasing option and mandatory convertible notes execution. MPM said it signed in February an agreement with PT Asetama Capital, in which MPM will issue up to 50 million new shares '€” accounting for 1 percent ownership '€” to Asetama.

Meanwhile, the execution of mandatory convertible notes involves Morninglight Investments Sarl, which gave Rp 910 billion for the option of converting the notes into an about 14 percent share. Other convertible notes holders, amounting to a combined Rp 100 billion, are Goldsweets Enterprise Ltd., Excel Dragon Overseas Inc., Energion Corporation and Ciroden Alliance Ltd., which will have about 1 percent each following the conversions.

Main parent company Saratoga will also increase its stake in MPM by purchasing a stake from another shareholder, PT Rasi Unggul Bestari, which prior to the IPO holds a 25 percent stake in the vehicle distributor. According to a published prospectus, Saratoga will directly and indirectly own a 45.12 percent stake in MPM following the IPO and execution of the agreements.

Saratoga itself is planning to enter the stock market soon. Edwin, who is also the president commissioner of MPM, said that Saratoga would off-load new shares accounting for about 10 percent of its enlarged capital in the IPO.