Garuda unit set for Indonesia's biggest share sale in a year to set up Batam facility

The GMF AeroAsia hangar in Jakarta, on May 18, 2010.
The GMF AeroAsia hangar in Jakarta, on May 18, 2010.PHOTO: ST FILE

JAKARTA (BLOOMBERG) - Garuda Maintenance Facility AeroAsia, a unit of national carrier Garuda Indonesia, plans to raise as much as US$300 million in an initial share sale to fund the setting up of a new unit in Batam, an island near Singapore, and expand overseas.

GMF AeroAsia, which conducts maintenance, repair and overhaul of aircraft for 170 customers, will offer between 20 per cent and 30 per cent of its equity to investors and is targeting an October listing on the Indonesia Stock Exchange, said president director Iwan Joeniarto. It will be the biggest initial share sale in South-east Asia's largest economy since Waskita Beton Precast raised US$402 million in September, according to data compiled by Bloomberg.

The company, spun off as an independent unit from Garuda in 2002, plans to use the proceeds from the share sale to set up a new facility in Batam island, south of Singapore, and to seek partners for its expansion in Dubai, Australia and East Asia, Joeniarto said. Mandiri Sekuritas has been appointed as the lead underwriter for the offering while Bahana Sekuritas, BNI Securities and Danareksa will act as co-underwriters.

"Our aim is to grow this company at the pace of 20 to 21 per cent over the next five years." Joeniarto said in a phone interview on Aug 16, referring to the revenue target. "Right now, 65 per cent of our revenue comes from Garuda and the rest from other airlines. In five years, that ratio will be reversed."

Indonesia is an aviation market with one of the world's worst safety records but it had its air-safety rating upgraded by the US Federal Aviation Administration last year, boosting efforts of Garuda, Lion Mentari Airlines and other carriers to expand services in the world's fourth-most populous country.

GMF AeroAsia's revenue may rise to US$424.8 million this year from US$388.7 million in 2016 while net income is seen at US$58.3 million from US$57.7 million, Joeniarto said. The company is bidding for the job of interior fitting and livery painting for Garuda's new ATR propeller planes, and subsequently enhance the scale of that business to bigger aircraft manufactured by Boeing and Airbus, he said.

Garuda's is seeking to lower the acquisition cost of new aircraft by having the planes delivered without paint or even interior and assign those jobs to GMF AeroAsia, the company said last year.