Kimia Farma sets share price at Rp 200
JAKARTA (JP): State-owned pharmaceutical company PT Kimia Farma said on Saturday it plans to sell its shares at Rp 200 (about 1.78 U.S. cents) each during the initial public offering (IPO) later this month.
Kimia Farma said in a press statement that the price was based on recommendations from its lead underwriter PT Danareksa Sekuritas.
"We believe the IPO price of Rp 200 is actually too low and below our initial expectation," said Kimia Farma corporate secretary Dandossi Matram in the statement.
According to him, some corporate investors have offered to purchase the shares at Rp 225 and even up to Rp 275.
However, the company settled for only Rp 200 because a larger part of the potential investors wanted to buy the shares at that level, he said.
Dandossi expressed confidence that the low price would lead Kimia Farma's shares to be oversubscribed when it goes IPO.
He said using the discounted cash flow method, Danareksa's calculated the shares actual value at Rp 418.
"So, compared to its actual value, the offered share price constitutes a 50 percent discount," he explained.
Kimia Farma will only sell about 500 million shares or 9 percent of its total shares during the IPO, with proceeds expected to reach about Rp 100 billion.
Company president Darodjatun said the company's IPO would be launched in the third week of this month.
However, the exact date still awaits confirmation from the Capital Market Supervisory Agency (Bapepam).
If listed, Kimia Farma will be the second state company after pharmaceutical producer PT Indofarma, to float its shares on the Jakarta Stock Exchange in April, as part of the government's privatization program.
The two firms are among the 16 state companies the government plans to privatize this year in a bid to raise some Rp 6.5 trillion in revenue.
Kimia Farma produces a variety of drugs, including over-the- counter products and contraceptives.
It also supplies medical and medical research equipment, including dental and surgical equipment, to hospitals and laboratories.
Dandossi had said earlier that Kimia Farma was able to expand its business by taking over the market share of other pharmaceutical companies that were hit by the 1997 economic crisis.
The company has six plants, located in Jakarta, Bandung, West Java, Semarang, Central Java, Watudakon, East Java, and Tanjung Morawa, North Sumatra. (bkm)