O

il palm plantation company PT Sawit Sumbermas Sarana is planning to float its shares on the market through an initial public offering (IPO) next month, with a goal of raising Rp 1 trillion (US$87.8 million).

The firm made a public announcement on Thursday that it would offload 1.5 billion new shares, which will be priced at around Rp 670 to Rp 970 each.

The number of shares offloaded will account for 15.7 percent of its enlarged capital.

'€œWe expect to secure Rp 1 trillion to Rp 1.45 trillion from putting the shares on the stock market,'€ Rimbun Sitomurang, the company'€™s president director, said.

The company, whose assets stood at Rp 2.34 trillion according to its first-half financial report, has appointed PT BNP Paribas Securities Indonesia, PT Mandiri Sekuritas and PT RHB OSK Securities
Indonesia as underwriters for the offering.

Sawit Sumbermas will use 60.5 percent of funds raised in the IPO to expand its planted areas in its existing plantations, expand total plantation area, build processing facilities and improve the capacity of its existing factories.

About 25 percent of the funds will be used to pay its Rp 1.2 trillion debt to PT Bank Mandiri and another 14.5 percent will be for working capital.

Sawit Sumbermas now has around 78,000 hectares of plantation area in Pangkalan Bun, Central Kalimantan, with total planted areas of 33,208 hectares and an average yield of 22.3 tons of oil palm fruit bunches (TBS) per hectare.

The company also has four processing facilities with a total capacity of 240 tons of TBS per hour and one kernel processing facility with a capacity of 150 tons per hour.

Rimbun said that most of the production was allocated for domestic consumption and sold to end
users like Wilmar, Sinar Mas and Asian Agri.

Sawit Sumbermas finance director Harry M. Nadir said the company would focus on enhancing its existing plantations and facilities before opening another facility in the area in 2017 and expanding the plantations. The company, which has secured a Roundtable Sustainable Palm Oil (RSPO) certificate, has to '€œbe careful in acquiring new planted areas to not violate RSPO rules'€, he said.

The company secured Rp 892 billion in revenue and Rp 180 billion in net profit in the first half of this year, according to Harry. It recorded 15 percent year-to-year increases both in revenue and profit thanks to rising production and sales.

He claimed the increases to be a good starting point to have the company listed on the country'€™s stock exchange, considering that other companies might face a slowdown as the crude palm oil (CPO) average selling price has continued declining due to the sluggish global market.

The company sold its CPO at $730-$750 a ton on average in the third quarter of this year, compared to $900 per ton in the same period last year.

Following the IPO, Sawit Sumbermas'€™s biggest shareholder, PT Citra Borneo Indah, will control a 26.4 percent ownership stake, while other shareholders PT Prima Sawit Borneo, PT Mandiri Indah lestari and PT Putra Boneo Agro Lestari will hold 13.6 percent of shares each.

The firm has scheduled the bookbuilding period to start on Nov. 29, the offering period for Dec. 3 to 5 and allotment of shares on Dec. 9 before a scheduled listing on the Indonesia Stock Exchange (IDX) on Dec. 12.