S

tate-owned construction company PT Pembangunan Perumahan (PT PP) plans to spin off its property division into an independent firm and float its shares on the Indonesia Stock Exchange (IDX) next year, an executive says.

PT PP finance director Tumiyana said on Monday the company will name the new subsidiary PT PP Properti and will hold its initial public offering (IPO) in the fourth quarter of next year.

'€œTotal shares to be offloaded are about 20 to 30 percent [of enlarged capital], and an estimated Rp 1 trillion [US$87 million] in funds will be raised,'€ Tumiyana said.

So far, the contribution of the company'€™s property division to PT PP'€™s total earnings was around 6 percent. After becoming an independent company listed on the stock exchange, PT PP Properti'€™s contribution is expected to increase up to 16 percent, Tumiyana said.

The property division only contributed 1.54 percent to PT PP'€™s revenue of Rp 8 trillion in 2012.

PT PP started to diversify its business into construction and property in 1991, according to a spin-off prospectus published recently. During the 1991 to 2013 period, the property division has developed nine residential projects, 12 commercial projects and three hospitality projects.

The residential projects are Bukit Permata Puri in Semarang (Central Java), Patria Park apartments in Jakarta, employee residences for Perum Otorita Jatiluhur in Purwakarta (West Java), Permata Puri residences in Bogor (West Java), Taman Griya Permata in Bali, Permata Puri Laguna in Bogor, Pavilion Permata apartments in Surabaya (East Java), FX Residence in Jakarta and Paladian Park apartments in Jakarta.

The commercial developments include Graha Bukopin in Surabaya, Trade Center Kapas Krampung in Surabaya, Mall Serang in Banten, Bumi Kopo Kencana shophouses in Bandung, Kios Pasar Kenari in Jakarta, Sungkono Business Park shophouses in Surabaya, Plaza PP in Jakarta, Mall Kapas Krampung in Surabaya, Plaza Centris in Jakarta, Grand Soho Slipi in Jakarta and Balcony Mall in Balikpapan (East Kalimantan).

The developer'€™s hospitality projects were two hotels, the Park Hotel with locations in Jakarta and Bandung, and a condotel called Balcony Condotel in Balikpapan.

The division is now planning to start developing two commercial superblocks in Surabaya and Jakarta with an estimated investment of Rp 7 trillion and Rp 11 trillion respectively. The division is also planning to develop lots in West Jakarta controlled by state-owned oil and gas firm PT Pertamina.

The property division'€™s total assets were worth Rp 2.34 trillion as of the end of April this year. The division earned Rp 39.93 billion during the first four months of the year, with the biggest contribution coming from its hotel business. The division'€™s netted Rp 7.35 billion in profits from January to April this year.

According to Tumiyana, the property division had 60 hectares in its landbank in the Kalimalang area in Jakarta, Semarang and Surabaya.

PT PP is expecting that spinning the division off will allow it to become more focused on making the best use of its assets. Under the plan, PT PP will hold a 99.9 percent stake in PT PP Properti. Meanwhile, the remaining 0.01 percent will be owned by PT PP'€™s employee association called Yayasan Kesejahteraan Karyawan Pembangunan Perumahan.

PT PP, which is 51 percent owned by the government, is planning to seek approval from shareholders for the spin-off plan in an extraordinary general meeting scheduled for Oct. 21.

Shares in PT PP tumbled by 8.94 percent on Monday to close at Rp 1,120 apiece, far greater than the 2.43 percent decline posted by the benchmark Jakarta Composite Index, which closed at 4,316.18.

'€” JP/Raras Cahyafitri