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