Indonesian Listed Companies Planning Rights Issue in H2-2017

This minimum free float regulation stems from January 2014 when the Indonesia Stock Exchange announced it would force all listed companies to have a minimum free float ratio of 7.5 percent per 31 January 2016 (BEI No. Kep-00001/BEI/01-2014). This regulation was designed in an effort to boost market liquidity and raise trade volume on the Indonesia Stock Exchange. However, although the deadline has passed, there are still a number of companies that need to adjust their shareholder composition to the new rule.

Meanwhile, a rights issue is a relatively easy strategy to obtain fresh funds for further business expansion. The timing is also considered right as domestic economic conditions are stable, while Indonesia's economic growth is estimated to accelerate (albeit modestly) and therefore it is a good time to invest in business expansion.

For example, Indonesian warehouse provider Mega Manunggal Property plans to to offer up to 3.08 billion shares, or 35 percent of the company's enlarged paid capital, in a rights issue to existing shareholders for a nominal price of IDR 100 a piece (in the first trading session on Thursday 7 September 2017 share of the company slid 2.56 percent to IDR 570 a piece). Mega Manunggal Property's biggest shareholder, Mega Mandiri Properti (which controls a 38.84 percent stake) indicated that it will subscribe. The rights issue is planned for 3 October 2017.

The management of Mega Manunggal Property said 10 percent of the funds that are generated through the rights issue will be used for working capital, while the remaining 90 percent is set to be used for capital expenditure. Mega Manunggal Property's rights issue plan was approved by the extraordinary general shareholder meeting that was held on 13 April 2017.

Meanwhile, Indonesian logistics and warehousing company Rimau Multi Putra Pratama will offer 13.6 billion new shares for a price of IDR 250 per share to its existing shareholders in order to generate up to IDR 3.41 trillion worth of new funds. The rights issue is expected to be concluded in the last quarter of 2017.

The company will use 76 percent of new funds to purchase a 57.25 percent stake in Indonesia AirAsia (through a debt and share swap deal). The remaining 24 percent will be used as working capital.

Indonesia's largest private hospital operator Siloam International Hospitals is also set to conduct a rights issue. Through the rights issue the company will issue 325.2 million brand new shares, equivalent to 25 percent of its enlarged share capital. Siloam aims to obtain IDR 3.09 trillion (approx. USD $232 million) worth of fresh funds through the corporate move.

Indonesian bread manufacturer Nippon Indosari Corpindo will offer 1.15 billion shares for a price of IDR 1,200 - 1,300 a piece in its upcoming rights issue, hence aiming to collect up to IDR 1.49 trillion that will be used to construct new production facilities.

In the first half of 2017 a total of six Indonesian companies conducted a rights issue, worth IDR 8.3 trillion.

Listed Indonesian Companies Planning Rights Issue:

Companies

Mega Manunggal Property

Rimau Multi Putra Pratama

Surya Esa Perkasa

Intikeramik Alamasri Industri

Siloam International Hospitals

Tempo Inti Media

Nippon Indosari Corpindo

MNC Sky Vision

Yulie Sekurindo