IPO of Paramita Bangun Sarana on the Indonesia Stock Exchange
Indonesian general contractor Paramita Bangun Sarana targets to raise up to IDR 350 billion (approx. USD $26.5 million) through an initial public offering (IPO) on the Indonesia Stock Exchange (IDX). The company will offer up to 300 million shares, equivalent to 20 percent of its enlarged capital, to investors through the corporate move. Vincentius Susanto, Secretary at Paramita Bangun Sarana, said the indicative price for shares is set in the range of IDR 1,000 - 1,300 a piece. The offering period for the shares is scheduled for 16 - 20 September 2016, while listing on the (IDX) is scheduled for 27 September.
Lead underwriter for the offering is Sinarmas Sekuritas. Datin Rashidah, Associate Director at Sinarmas Sekuritas, informed that 40 percent of the funds generated through the IPO will be used for working capital (which includes human resources' salaries, the purchase of raw materials and the payments of subcontractors), while 35 percent will be allocated to the firm's business expansion (which includes the diversification of its core business). The remaining 25 percent will be used by Paramita Bangun Sarana to purchase machinery and heavy equipment (which includes bulldozers, cranes and excavators).
The company is eager to diversify its business in order to become a more competitive firm and strengthen its business and financial models. This is part of the company's business expansion (to which it allocates 35 percent of IPO proceeds). Paramita Bangun Sarana's diversification plans involve steel manufacturing. This can be in the form of a joint venture with a steelmaker, the acquisition of an existing steel manufacturer, or the development of a steel factory. If the company indeed manages to add steel manufacturing to its business activities, then it will surely improve the company's value chain.
In the first quarter of 2016 Paramita Bangun Sarana booked IDR 301.0 billion (approx. USD $22.8 million) in revenue, up 72.4 percent (y/y). Meanwhile, its net profit rose slightly to IDR 53.9 billion over the same period.