Indonesia’s biggest IPO this year

Share sale: A technician checking the engine of a Garuda Indonesia aircraft. GMF AeroAsia, which conducts maintenance, repair and overhaul of aircraft for 170 customers. It will offer between 20 and 30 of its equity to investors and is targeting an October listing. — AFP

JAKARTA: PT Garuda Maintenance Facility AeroAsia, a unit of national carrier PT Garuda Indonesia, plans to raise as much as US$300mil in an initial share sale to fund setting up of a new unit in an island near Singapore and expand overseas.

GMF AeroAsia, which conducts maintenance, repair and overhaul of aircraft for 170 customers, will offer between 20% and 30% of its equity to investors and is targeting an October listing on the Indonesia Stock Exchange, said president director Iwan Joeniarto.

It will be the biggest initial share sale in South-east Asia’s largest economy since PT Waskita Beton Precast raised US$402mil in September, according to data compiled by Bloomberg.

The company, spun off as an independent unit from Garuda in 2002, plans to use the proceeds from the share sale to set up a new facility in Batam island, south of Singapore, and to seek partners for its expansion in Dubai, Australia and East Asia, Joeniarto said.

PT Mandiri Sekuritas has been appointed as the lead underwriter for the offering while PT Bahana Sekuritas, PT BNI Securities and PT Danareksa will act as the co-underwriters.

“Our aim is to grow this company at the pace of 20% to 21% over the next five years,” Joeniarto said in a phone interview on Aug 16, referring to the revenue target. “Right now 65% of our revenue comes from Garuda and the rest from other airlines. In five years that ratio will be reversed.”

Indonesia is an aviation market with one of the world’s worst safety records but had its air-safety rating upgraded by the US Federal Aviation Administration last year, boosting efforts of Garuda, PT Lion Mentari Airlines and other carriers to expand services in the world’s fourth-most populous country.

“Indonesia remains a growth story for the global aviation industry as it’s the biggest commercial airline market in South-East Asia,” Shukor Yusof, founder of aviation consulting firm Endau Analytics, said by phone.

“The success of the IPO will depend on the valuation and the future of the company will hinge on how GMF AeroAsia can build its business outside Garuda.”— Bloomberg

GMF AeroAsia’s revenue may rise to $424.8 mil this year from $388.7 mil in 2016 while net income is seen higher at $58.3 mil from $57.7 mil, Joeniarto said. The company is bidding for the job of interior fitting and livery painting for Garuda’s new ATR propeller planes, and subsequently enhance the scale of that business to bigger aircraft manufactured by Boeing Co. and Airbus SE, he said.

Garuda’s is seeking to lower the acquisition cost of new aircraft by having the planes delivered without paint or even interior and assign those jobs to GMF AeroAsia, the company said last year. — Bloomberg


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