Starbucks (SBUX) Indonesia’s (EIDO) franchisee MAP Boga Adiperkasa, a subsidiary of retailer giant Mitra Adiperkasa (MAPI), listed 1% of its shares in an initial public offering on June 21.
The company expects to raise RP 37.25 billion or $2.8 million from the 22.17 million shares issued through this IPO and has set an IPO price of 1,680 rupiah per share. On listing, MAP Boga is expected to have a market capitalization of $280 million.
Initially, MAP Boga was to off-load 20% of its stake through this IPO, but in November last year, General Atlantic bought 725 billion rupiah worth convertible zero coupon bonds which will be converted to equity at the time of the IPO. This would equate to a 19.9% stake in the company.
The company will use the funds generated from this IPO to finance its expansion program. In 2017, the company plans to open 60 new Starbucks outlet across Indonesia. Overall, Mitra Adiperkasa aims to open 200 new food and beverage outlets in 2017. Currently, the company operates 273 Starbucks branches in Indonesia. Starbucks is also investing heavily in China and expects it to overtake the US by 2020 in terms of store count.Experts expect this IPO to also boost shares of its parent company Mitra Adiperkasa which have been under pressure due to weakness in its department stores division. As such, the company is focused on tapping into attractive opportunities in Indonesia’s growing food and beverage industry. Presently, the company owns and operates 300 outlets in 24 cities across Indonesia including global food and beverage chains like Starbucks, Pizza Express, Krispy Kreme, Cold Stone Creamery, and Godiva.
Why the time is ripe for an IPO in Indonesia?
Indonesia’s benchmark index, the Jakarta Composite Index, has surged 9.4% year to date outperforming major developed markets. Following an S&P upgrade in May, Indonesian stock markets gained 3% as fund managers turned optimistic on the country’s growth outlook.
In the past two years, Indonesia’s position in emerging market economies has strengthened despite low commodity prices. The government’s focus on structural economic, fiscal and economic reforms to boost investments in the private sector is a key catalyst for gains in the country’s equity markets.In the last 12 months, 22 IPOs with aggregate deal value of $739 million have been announced in Indonesia, 34% higher than a year ago. Fetty Kwartati, Mitra Adiperkasa’s spokesperson recently commented on the timing of the IPO, “We believe this was the best time”. As per Bloomberg data, in 2017 so far, fund managers have plowed in $2.1 billion in Indonesia’s equity markets and $6.3 billion in its bond markets. With emerging markets expecting $970 billion inflows in 2017, Indonesia’s stock markets could continue to gain. Fund managers expect the country to receive $5-$10 billion in inflows after the S&P upgrade, with IPOs in Indonesia sure to get strong allocations.