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Paint maker Avian Brands plans to go public next year
Avian Brands wants to release about 10 percent of its shares in an initial public offering (IPO) in the third quarter of 2019 at the latest
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vian Brands wants to release about 10 percent of its shares in an initial public offering (IPO) in the third quarter of 2019 at the latest. The local paint producer had initially planned such a move for earlier this year but delayed it because of unfavorable market conditions.
Avian Brands vice president director Ruslan Tanoko revealed the new schedule recently at the company’s 40th anniversary commemoration in Surabaya, East Java. He said the plan would not be affected by the 2019 presidential election.
“Whoever the president will be, we will still decide to list our shares on the stock exchange,” he said, referring to the election scheduled for April 17.
The company expects to raise Rp 2 trillion (US$134.8 million) to Rp 3 trillion from the IPO to finance the construction of a research and development (R&D) division on a 5,000-square-meter plot of land in Sidoarjo, East Java.
The R&D division, Ruslan said, would be mainly tasked with conducting research on innovation in paint products, demand for which is projected to grow particularly fast in the industrial and marine sector.
Aside from unfavorable economic conditions, Ruslan explained that the IPO had also been delayed because a Singaporean sovereign wealth fund, GIC Private Limited, formerly known as the Government of Singapore Investment Corporation, planned to join the corporate action as a minority buyer for the shares.
He said the presence of GIC, which plans to conduct the action in the second half of 2019, would help the company to elevate its position in the market and improve its corporate governance.
“These things made us more confident about entering the stock market,” he said.
Avian Brands currently owns three factories with a total production capacity of 300,000 tons of paint a year. They are located in Sidoarjo as well as in Serang, West Java, and Medan, North Sumatra, and they contribute 80 percent, 15 percent and 5 percent to total production, respectively.
The company is preparing to build a new facility with an annual capacity of 300,000 tons in Cirebon, West Java, which is expected to start operations by 2021.
Ruslan said Avian Brands was attractive for foreign investors, given its factories’ logistics and transportation management. He claimed the company was among the world’s 40 biggest paint makers.
Currently owning more than 500 trucks, the company was capable of distributing its products to 78 branch offices across Indonesia, he said.
“By early 2019, we plan to open our first office in Jayapura, Papua,” said Ruslan.
Previously, Achmad Dwiwahjono, the director general of textiles, chemical and miscellaneous industries at the Industry Ministry, said domestic manufacturers fulfilled 70 percent of national annual demand of 650,000 tons of paint.
However, the trade balance in paint products has been in deficit over the past three years. In 2016, the country imported paint worth $243.67 million, while the export value was only $70.73 million.
