Merdeka Copper Gold’s Tense IPO Timing


MAY 12, 2015

Jakarta. Merdeka Copper Gold, a local miner under investment firm Saratoga Investama Sedaya, targets to raise as much as Rp 1.8 trillion ($136 million) from an initial public offering next month despite lingering market uncertainties due to the country’s economic slowdown.

The company plans to sell 874 million new shares at a price between Rp 1,800 and Rp 2,100 a piece. It will offer the shares from June 4 to 8th with Indo Premier Securities and Bahana Securities serving as underwriters.

The miner will be offering shares to the public despite still being at the development stage of business. It aims to begun production by next year with hopes to book a profit in the following year.

Merdeka Copper Gold plans to allocate funds from the offering towards its subsidiary, Bumi Suksesindo, to finance the company’s capital expenditure and working capital, as well as pay off its debt.

Still, the miner’s trading debut is likely to face a wave of negative sentiment brought on by disappointing first quarter earning results and Indonesia’s slowing economic growth, according to Guntur Hariyanto, an analyst at ratings agency Pefindo.

“From the investor side, there’s still interest in new companies coming to the stock market,” said Guntur.

After a trend of slowing growth in the earnings report of most locally listed companies, Indonesia’s economy reported 4.7 percent in the first three months this year — its weakest growth since five years.

Such conditions, according to Guntur, could derail investors’ interest on any prospective listed companies.

“[Merdeka Copper Gold]’s expectations is to raise up to Rp 1.8 trillion, but with this negative sentiment, there’s a risk that they may miss the target,” he said.

Investor anxiety over Indonesia’s economic slowdown has taken a toll on the expansion plans of listed companies in the country. Telecommunication operator Solusi Tunas Pratama pulled out of its $300 million planned share sale on Monday, citing concerns of weak market conditions, according to a report from Reuters.

Globe Asia