Underwriters that were appointed for the IPO are Ciptadana Sekuritas Asia, Mandiri Sekuritas, and UBS Sekuritas Indonesia.

Currently, Cemindo Gemilang is owned by Singapore-based holding company WH Investments Pte. Ltd. (97.12 percent) and Gama Group (2.88 percent). After the IPO, WH Investments Pte. Ltd. maintains a controlling 82.55 percent stake, while Gama Group holds a 2.45 percent stake. The remaining 15 percent will then be in the hands of the public.

When we take a look at where the IPO funds will be used for, then it seems that the company’s IPO is quite ‘debt-driven’ with a significant portion of funds going to debt settlements. In its IPO prospectus, Cemindo Gemilang stated that around 58 percent of collected funds will be used for working capital (which includes a number of debt payments). Meanwhile, another 17 percent of the IPO proceeds are allocated to the repayment of a syndicated loan. A further 11 percent will be used to settle part of Cemindo Gemilang’s debt to Sinoma International Engineering Co. Ltd. and 6 percent to settle part of its debt to Sinoma Engineering Indonesia. Only the remaining eight percent will be used for capital expenditure.

And, indeed, the financial numbers seem to indicate that Cemindo Gemilang only has a debt service coverage ratio (DSCR) of 0.5 (times) in Q1-2021, which suggests that there is only enough net operating income to cover half of the company’s annual debt payments. This would explain why a significant portion of IPO proceeds will be used to settle debt obligations, hence improve the company’s fundamentals.


The full article is available in the August 2021 edition of our monthly report. report can be ordered by sending an email to info@indonesia-investments.com or a message to +62.882.9875.1125 (including WhatsApp).

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