Mitra Adiperkasa to sell 30% stake via IPO

Rendi A. Witular, The Jakarta Post, Jakarta

Retail company PT Mitra Adiperkasa announced on Wednesday that it would sell 30 percent of its shares to the public via an initial public offering (IPO) in November to help fund its business expansion and debt refinancing.

Mitra is the local operator of several internationally licensed stores, such as Sogo, Dabenhams, Starbucks Coffee, Golf House, The Athlete's Foot, Reebok, Sports Station, Marks & Spencer, Spice Garden, Books Kinokuniya, and Strandbags.

Mitra finance director Susiana Latif said the company would offer 30.1 percent of its stake or 500 million shares offered at between Rp 675 and Rp 975 per share, with a proceed expectation of about Rp 480 billion (US$53.3 million).

"Proceeds from the IPO will be mostly allocated for business expansion, such as for opening new stores and chains or for renovating existing ones," said Susiana during a public presentation to investors and reporters.

Susiana explained that 50 percent of the proceeds would be used for the planned expansion, 30 percent for paying part of the debts owed by the company and its subsidiaries, and 20 percent for improving the infrastructure and working capital.

Mitra will offer the shares from Nov. 2 until Nov. 4, with Mandiri Securities acting as the arranger for the IPO. The shares will be listed on the Jakarta Stock Exchange on Nov. 10.

Established in 1995, Mitra is controlled by the Gozali family, who is linked to indebted business tycoon Sjamsul Nursalim. The family has a string of companies involved in a wide range of businesses, including property and agribusiness.

At present, the company owns licenses to market around 50 international brands in Indonesia, with 460 retail outlets under its operation.

The company plans to open as many as 70 outlets per year and to continue adding new brands to its existing portfolios, such as securing new licenses to manufacture and distribute Spalding from United States and Ellesse from Italy in Indonesia.

Lower production costs have enabled Mitra to sell its internationally licensed goods at competitive prices. For example, the company can sell its sports shoes at around 20 percent premium to the local brands.

Susiana said the company expected sales to grow by 12.4 percent this year to Rp 2.26 trillion from Rp 2.01 trillion last year, with a net profit estimated to reach about Rp 102 billion as against Rp 74.2 billion last year.

As for next year, the company projects sales to grow by 28 percent to Rp 2.9 trillion, with a net profit of Rp 140 billion.

As a major player in the country's up-market shopping centers and outlets, Mitra targets more resilient urban consumers with unlimited spending power.

The segment targeted by the company is those with monthly disposable incomes in excess of Rp 1 million. Although such consumers are concentrated in a few cities and are relatively few compared to the country's whole population of 220 million people, the number is expected to rise on the back of the improving economy.

Jakarta accounted for 73.4 percent of Mitra's sales last year, followed by Surabaya with 12.2 percent, Makassar with 3 percent, Bandung with 2.7 percent, Bali with 1.9 percent and Medan with 1.7 percent.

Performance of major retail companies 2003 (in billions of rupiah)

Sales Assets Operating Net profit

revenue

Matahari 5,065 3,421 151 115

Ramayana 3,553 2,512 360 303

Alfa 3,615 663 1 7

Mitra Adiperkasa 2,014 1,244 122 74

Great River 509 1,123 78 16

Source: Mitra Adiperkasa