Hospital operator Medikaloka Hermina (Hermina) will continue with its plans to take on new hospitals and add more beds in its existing units this year even though its first listing on the stock market on Wednesday was below expectations.

Hermina raised Rp 1.3 trillion (US$92.3 million) from the initial public offering (IPO) on Wednesday as it released 351.38 million new shares, equal to 11.8 percent of its issued and fully paid up capital.

The cost of the hospital-expansion plan will take up 25 percent of the total IPO proceeds, followed by 25 percent for medical-equipment purchases, 38 percent for debt repayment and 12 percent for operational expenses.

Along with internal cash reserves, the healthcare provider will use part of the proceeds from the IPO to add four new hospitals to its portfolio, either through acquisition or building by itself.

“We have just opened one [of the targeted four] in Samarinda [East Kalimantan] over the past few weeks,” said Hermina finance director Aristo Widjaja in a press briefing on Wednesday.

The remaining three hospitals would be opened during the second half of this year in Palembang, South Sumatra and Padang, West Sumatra, and in one undisclosed location, Aristo said. Each hospital will need an investment of around Rp 110 billion.

As of December 2017, the company had 28 hospitals with 2,780 beds. About 200 new beds will be added this year, Aristo said.

However, volatility in the Indonesian stock market impacted the company’s IPO, when its shares, traded under the ticker symbol HEAL, dropped from the initial listing price of Rp 3,700 per share.

At one point during Wednesday’s trading at the Indonesia Stock Exchange (IDX), Hermina’s shares nosedived, reaching Rp 2,490 at its lowest point, down by 32.7 percent. They finally closed at Rp 3,170.

Hermina appointed PT Citigroup Sekuritas Indonesia, PT Credit Suisse Sekuritas Indonesia, PT DBS Vickers Sekuritas Indonesia and PT Mandiri Sekuritas as joint lead underwriters for the IPO.

Mandiri Sekuritas director Laksono Widodo said Hermina’s shares plunged significantly because of high volatility in the domestic capital market, pointing out that the Jakarta Composite Index (JCI) — the main gauge of the IDX — had been fluctuating in the past weeks as global uncertainty continued.

Mandiri Sekuritas president director Silvano Rumantir voiced a similar opinion that the weakening of Hermina’s shares was not related to the company’s fundamentals as the prospect of the healthcare sector in Indonesia remained great.

Hermina is also confident that it can differentiate itself from its major competitors Mitra Keluarga and Siloam International Hospitals, both of which are also publicly listed.

“Our strategy in competing with competitors is by differentiating our target market, reaching not only the middle and upper-middle segments, but also serving low-income people,” Aristo said.

With its strategy, Hermina hopes it can grow its revenue by at least 20 percent this year, as in 2017. Last year it booked Rp 2.7 trillion in revenue, meaning that it expects to book revenue of Rp 3.24 trillion in 2018.

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