JAKARTA – PT Pertamina Geothermal Energy slumped in Jakarta during its trading debut after a 9.06 trillion rupiah (S$800 million) initial public offering (IPO), Indonesia’s largest over the past year.
Shares fell as much as 6.9 per cent to trade at 815 rupiah on Friday. A 25 per cent stake in the company floated after 10.35 billion shares were sold at 875 rupiah each, within the lower band of the offered range.
Such a first-day decline does not bode well for upcoming listings planned by the government this year. The firm is the geothermal unit of energy company PT Pertamina, and the first of a series of mid- to large-size offerings by state-owned firms lined up for 2023.
“Overall, on the positive side, Pertamina Geothermal has long-term dollar-denominated contracts in place and has little margin fluctuations, which provides stability for future earnings,” said Mr Sumeet Singh, head of equity research, IPOs and placements at Aequitas Research, who publishes on Smartkarma.
“However, it also lacks growth, which makes it almost like buying a government bond and, hence, we wouldn’t be willing to buy it at an earnings yield which is much ahead of the 10-year risk-free rate,” Mr Singh said.
South-east Asia’s largest economy is selling stakes in state-controlled firms to raise funds while reducing their reliance on the state budget. The IPO is the second-largest in Asia since the start of 2023 and the third-largest in the world.
Deputy State-Owned Enterprises Minister Pahala Mansury declined to comment on Geothermal’s share price and pointed out the company’s strong fundamentals.
The IPO attracted major investors including the United Arab Emirates’ main renewable energy company Masdar, according to a company statement on Friday.
Before Geothermal’s debut, only 29 per cent of the 21 companies that listed in Jakarta over the past decade after raising over $100 million finished their debut session lower than the listing price, according to data compiled by Bloomberg. The average decline for those firms on their inaugural day was 8.6 per cent.
PT Garuda Indonesia Persero, the flag carrier that began trading in 2011 following a $524 million IPO, slumped 17 per cent in its first session. In contrast, state-controlled PT Waskita Beton Precast jumped 10 per cent on its September 2016 debut after its $395 million IPO.
Geothermal’s IPO is the largest in Jakarta since GoTo Group’s $959 million listing in April 2022. The strong line-up of deals in the Indonesian capital this year is in contrast with a slow start in Asian hubs such as Hong Kong, Seoul and Singapore.
PT Pertamina Hulu Energi, the upstream unit of Pertamina, and plantation firm PalmCo are next to go public this year.
Prior to Geothermal’s Friday debut, only four alternative-energy firms had sold shares though IPOs in Indonesia since 2013, raising combined proceeds of about US$40 million, the data shows.
PT CLSA Sekuritas Indonesia, Credit Suisse Group and PT Mandiri Sekuritas were the arrangers of the IPO. BLOOMBERG
