Indonesia: Cigarette Maker Wismilak IPO Set to Raise Rp 409b

Source from:  Jakarta Globe 12/05/2012

Wismilak Inti Makmur, a Surabaya-based cigarette maker, is expected to raise Rp 409 billion ($43 million) in an initial public offering next week.

The company plans to price shares at Rp 650 apiece, well within its indicative price range, according to FinanceAsia.com, citing unidentified sources.

Wismilak plans to offer 630 million shares, or 30 percent of its enlarged equity, to investors on Dec. 10-12. The shares will be listed on the Indonesian Stock Exchange on Dec. 17, the company said.

Iman Rachman, a director at Mandiri Sekuritas, one of the underwriters, said on Nov. 19 that the company aimed to fetch an IPO price at between Rp 575 and Rp 800 a share. Wismilak hired OSK Nusadana Securities as a second underwriter.

Iman did not respond to calls by the Jakarta Globe seeking comment on the IPO price on Monday.

Indonesian companies are selling shares through IPOs to capitalize on rising consumer demand and investor confidence in the nation's equity market.

Ronald Walla, president director of Wismilak, said on Nov. 19 that 50 percent of the IPO's proceeds would be used to finance its various business plans, 30 percent to boost capital and the remaining 20 percent to repay debt.

The company plans to spend money on new machines to produce cigarettes. Its production capacity stands at 3 billion cigarettes per year, made both by machines and using hand-rolling methods.

The firm aims to boost production to 4.7 billion in the coming years, Ronald said on Nov. 19.

Wismilak will join Gudang Garam — the country's largest clove cigarette maker — as well as Hanjaya Mandala Sampoerna and Bentoel International as cigarette companies listed on the exchange.

Wismilak was founded in 1962 as Gelora Djaja and adopted its current name in 1994. Its popular brands include Wismilak and Galan.

Indonesia is one of the world's largest tobacco markets, with liberal advertising regulations and low taxes.

Wismilak will be added to the growing list of Indonesian companies taking the IPO route this year.

Express Transindo Utama, the country's first listed taxi operator, made a stellar debut in early November, after it raised Rp 589 billion by selling 49 percent of its stake. Express is controlled by the country's Rajawali Corpora, founded by one of the country's richest people, Peter Sondakh. Enditem