Indonesia Stock Exchange Update: Rights Issue HM Sampoerna
Indonesia’s largest cigarette producer, Hanjaya Mandala Sampoerna (HM Sampoerna), narrowed the price range for its 4-to-65 rights issue from the range of IDR 63,000 - IDR 77,000 to the new range of IDR 65,000 - IDR 77,000 per share. HM Sampoerna, the local unit of global tobacco giant Phillip Morris International Inc., aims to collect USD $1.4 billion through the offering of 269.7 million shares. Reportedly, the company will take orders from institutional and retail investors starting from Monday (21/09).
If successful, the deal may become the largest rights issue in Southeast Asia this year (and the largest ever in Indonesia, surpassing the USD $1.3 billion raised by Bank Mandiri in 2011). As such, it could provide some support for Indonesia’s benchmark Jakarta Composite Index which has weakened over 16 percent so far in 2015 as the result of looming higher US interest rates, a heavily depreciating rupiah, weak domestic corporate earnings, as well as sluggish domestic and global economic growth (causing low commodity prices).
Philip Morris International Inc. needs to cut its 98.18 percent stake in HM Sampoerna in order to comply with new regulations. Per January 2016, listed companies on the Indonesia Stock Exchange are required to have a free-float of at least 7.50 percent. With a market value of USD $23.2 billion, HM Sampoerna is one of the largest companies in Indonesia in terms of market capitalization.
Stock Quote HM Sampoerna - HMSP:
HM Sampoerna is expected to price the deal on 1 October 2015 and to start trading ex-rights on 20 October. Joint global coordinators of the offering are the Goldman Sachs Group Inc. and JPMorgan Chase & Co. with Citigroup Inc. Credit Suisse Group AG and Mandiri Sekuritas as joint bookrunners.
Further Reading:
• Company Profile of HM Sampoerna
• Tobacco Industry Indonesia Concerned about Looming Tax Hike
• Smoking in Indonesia: Government’s Mixed Tobacco Control Policies