Jakarta. Planned rights issues by cigarette maker Handala Mandala Sampoerna and department store operator Rimo International Lestari will proceed as scheduled despite the current volatility in the market, an official said on Wednesday.
Samsul Hidayat, a director at the Indonesia Stock Exchange (IDX) in charge of evaluating listed companies, said neither company had given any indication that it planned to withdraw its planned rights issue.
Sampoerna, the country’s biggest cigarette producer by market capitalization, says it plans to carry out the rights issue in October, to meet minimum free-float requirements and raise a projected Rp 26.7 trillion ($1.89 billion). Rimo, meanwhile, expects to raise as much as Rp 8.1 trillion from selling new shares next month, with proceeds to go toward acquiring property developer Hokindo Mediatama.
The combined rights issues by both companies are expected to amount to Rp 34.8 trillion.
“HM Sampoerna and its parent, Philip Morris Indonesia, have held road shows domestically and overseas,” Samsul said. “They of course were looking for potential institutional investors to raise that much money.”
If it goes ahead as planned, it will be the biggest rights issue in Southeast Asia this year.
Samsul said Sampoerna had not yet notified the IDX about the underwriters for the issue. Reuters reports that Credit Suisse, Citigroup, Goldman Sachs, JPMorgan and Mandiri Sekuritas are working on the Sampoerna deal.
Sampeorna plans to hold an extraordinary meeting of its shareholders on Oct. 9 to discuss the matter. It plans to sell 269.72 million new shares in the range of Rp 63,000 to Rp 99,000 per share. Philip Morris Indonesia currently holds 430.31 billion shares, or a 98.18 percent stake in Sampoerna.
Rimo plans to undertake its rights issue in the second half of this year, with a shareholders’ meeting scheduled for Sept. 18.
Guntur Pasaribu, the president director of Mark Asia Strategic, which is advising Rimo on the plan, said he was upbeat it would go ahead and that now was the right time for investors to buy into companies with a promising future.
The Indonesian stock market has been buffeted by concerns of slowing growth in China, a major consumer of Indonesian resources, and investors’ anxiety over the possibility of the US Federal Reserve hiking its key interest rate.