Mitra Keluarga to List on IDX in March

FEBRUARY 26, 2015

Jakarta. Mitra Keluarga Karyasehat, one of the country’s biggest hospital operators, expects to raise up to Rp 4.7 trillion ($361 million) from its planned initial public offering next month, which will be used in order to expand its hospital network over the next five years.

The plan is slated to become the country’s largest IPO in over four years amid a rally in the Indonesia Stock Exchange (IDX) that has been on a record breaking streak over the last five days. Mitra Keluarga, a subsidiary of pharmaceutical giant Kalbe Farma, will offer 262 million shares to the public at a price range of Rp 14,500 to Rp 18,000, the company said in a statement on Thursday.

The shares account for 18 percent of total enlarged shares, consisting of 5 percent new shares and 13 percent of shares divested by private equity firm Lion Investment Partners.

Mitra Keluarga will sell the shares on March 17 and 18 and list it on the local bourse at the end of next month.

The company appointed Deutsche Securities Indonesia, Morgan Stanley Asia Indonesia and UBS Securities to manage the sale as the lead underwriters for the public offering.

The company will hold road shows in several cities overseas next week, including Singapore, Hong Kong and London.

“We will continue to provide the best health care service on the back of seven new hospitals in the Greater Jakarta region and Surabaya in the next five years, financed by proceeds from this public offering,” said Rustiyan Oen, the company’s president director, after a public presentation to analysts and investors in Jakarta on Thursday.

Mitra Keluarga, which currently operates 11 hospitals within the Greater Jakarta region and Surabaya, East Java, plans to open one new hospital in West Jakarta later this year and two new hospitals next year, according to Rustiyan.

He said the health care industry in Indonesia still has a lot of room for growth in the next five years, backed by the rising demand for health services from the country’s expanding middle class.

“The government’s social security program will also help growth in the next five years,” the president director added.

Mitra Keluarga will be the second hospital operator to list on the IDX, following Siloam International Hospitals’ Rp 1.4 trillion IPO in 2013. It could be the largest since flag carrier Garuda Indonesia raised Rp 4.7 trillion in 2010.

Still, the positive mood that has lifted the local bourse to repeated record highs this week may not be enough to lure investors to the planned IPO.

“It’s true that the market is positive right now, but Mitra Keluarga’s price is at quite a premium,” William Suryawijaya, an analyst at Asjaya Indosurya Securities, told GlobeAsia.

The company’s price-to-earnings ratio for 2015 is estimated at 35 to 42 times, according to Kresna Graha Sekurindo. That compares to a broader market PER of 24 times.

“I think investors are attracted to hospitals for both short term and long term …  But considering Mitra Keluarga’s high price, it would mostly be for the long term.”