Considering Madusari Murni Indah will offer 495.95 million shares, equivalent to 20 percent of the company's share equity, to the public through the corporate move it will collect between IDR 247.97 billion and IDR 297.57 billion (approx. USD $19 million) in fresh funds.

Wiwiek Sutanto, President Director of Sucor Sekuritas, said the IPO price range reflects a price-to-earnings ratio (PER) of 9 - 11 times. Sucor Sekuritas is the underwriter for the IPO. Earlier, it announced that 80 percent of the newly available shares will be allocated for domestic institutional investors, while retail investors can invest in the remaining 20 percent.

Meanwhile, Arief Goeadibrata, President Director of Madusari Murni Indah, said the company will use 94.45 percent of the IPO proceeds to increase its production capacity of ethanol through the establishment of a new factory in Lampung (South Sumatra) as well as the purchase of new machinery. The remaining IPO funds will be used to build an ethanol storage warehouse in Lawang (East Java).

Currently, Madusari Murni Indah's production capacity of ethanol stands at 80 million liter per year. The new plant, which is expected to become operational in 2019, will lift the company's ethanol production capacity to 130 million liter per year.

The new ethanol factory is estimated to require IDR 550 billion (approx. USD $38.2 million) in investment. Goeadibrata added that IDR 200 billion will originate from the IPO, IDR 150 billion from bank loans, and the remainder from the company's internal cash reserves.

In the first quarter of 2018 Madusari Murni Indah's net profit surged 75.4 percent year-on-year (y/y) to IDR 31.7 billion. Meanwhile, the company's sales rose 2.14 percent (y/y) to IDR 277.54 billion over the same period. In full-year 2018 it targets to collect IDR 1.4 trillion in sales.

While Madusari Murni Indah controls 53 percent of the domestic ethanol market, it also exports around 40 percent of its ethanol products to countries such as Taiwan, Vietnam, Thailand and the Philippines. Goeadibrata said the cosmetics industry is currently the company's biggest buyer, accounting for 30 percent of total sales.