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Sampoerna to offer more shares to public
Publicly listed cigarette maker PT HM Sampoerna plans to enlarge its public ownership to comply with the local bourseâs 7
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Publicly listed cigarette maker PT HM Sampoerna plans to enlarge its public ownership to comply with the local bourse's 7.5 percent free float shares requirement.
Sampoerna president director Paul Norman Janelle said on Monday that his firm had obtained approval from its majority shareholder to explore options to comply with the Indonesia Stock Exchange (IDX) regulation, which requires all publicly listed companies to have at least 7.5 percent of their paid-up capital owned by the public by January 2016.
Under such a regulation, Sampoerna will have to release at least 5.68 percent more shares to the public within the next seven months.
The publicly listed cigarette maker is currently 98.18 percent owned by American tobacco giant Philip Morris International (PMI), through Philip Morris Indonesia, with the remaining 1.82 percent stake being owned by the public.
Janelle said that his firm had engaged with investment banks to assist with the evaluation of various strategic options to fulfill the requirement.
'These include potential capital market transactions,' he said in a statement, without detailing any specific corporate action.
Reza Priyambada, an analyst with Nong Hyup Korindo Securities Indonesia, said that available options for Sampoerna to increase public ownership would be through a rights shares issuance or preemptive rights offering.
He argued that the corporate action, if it was just to comply with the 7.5 percent threshold, would not significantly affect the company's management or value in the stock market.
Sampoerna is currently among the 'big caps' ' market capitalization giants ' in the country's stock market, with market value hitting Rp 310 trillion (US$23.2 billion) at Monday's close, the second largest after Bank Central Asia (BCA).
In the first quarter alone, the company conquered around 35.4 percent of the cigarette market share in Indonesia, which is the world's second largest cigarette market after China with a market volume of around 314 million cigarettes a year.
The firm booked Rp 21.56 trillion in net sales in the first three months of the year, a 17.7 percent increase compared to Rp 18.31 trillion in the same period last year despite a decline in sales volume for hand-rolled clove cigarettes as more smokers now favor machine-rolled cigarettes.
The firm claims that it is among the largest taxpayers in the country with total paid excise, value-added and income taxes hitting Rp 52 trillion last year.
Other than Sampoerna, a number of publicly listed companies, including private lenders J Trust Indonesia and PT CIMB Niaga, need to float more public shares as their respective public shares are still below 7.5 percent.
J Trust Indonesia president director Ahmad Fajar said previously that his firm would gradually float its shares to meet the 7.5 percent requirement.
As of May, J Trust Indonesia is currently 98.07 percent owned by J Trust Co., 1 percent by PT J Trust Investment Indonesia, 0.927 percent by the Deposit Insurance Corporation (LPS) and 0.003 percent by the public.
CIMB Niaga, meanwhile, is currently 96.92 percent owned by CIMB Group Sdn. Bhd. and 3.08 percent owned by the public, according to data from the IDX.
The 7.5 percent free float shares requirement is expected to boost liquidity in the market and companies that fail to comply will have to be delisted from the local stock market.
