Indonesia's Adaro IPO Five Times Oversubscribed

A $1.3-billion initial public offering by Indonesian coal company PT Adaro Energy was five times oversubscribed at the end of its offer period last week, its lead manager said.

Several big foreign investors active in Asia have grumbled that they were shut out of Indonesia's biggest-ever IPO despite heavy overseas interest in what is seen as an attractively priced deal.


PT Danatama Makmur, the lead manager for the offering, said in a statement released late on Sunday that 74.77 percent of shares were allocated to foreign investors, with the remainder going to domestic investors.

Most of those shares have been allocated to a number of parties connected to the company, including five firms who had stakes in Adaro's coal mining unit, PT Adaro Indonesia, the country's second-largest coal producer by volume.

Around 84 percent of the allotment to domestic investors went to institutional shareholders including mutual funds, asset managements, insurance and pension funds, translating to 2.6 trillion rupiah ($284.1 million), the underwriter added.

Adaro had said in a document that 69.15 percent of the 11.14 billion shares offered would be allocated to five investors who already had stakes in PT Adaro Indonesia, a coal miner that Adaro Energy plans to acquire with the proceeds from the IPO.

They are Farallon Capital, Kerry Coal, the Government of Singapore Investment Corp (GIC), Citigroup and Goldman Sachs.

Danatama said allotments for retail investors were only 4.01 percent of the total share offering.

Adaro Energy will control one of Indonesia's biggest coal- miners, PT Adaro Indonesia, at a time of soaring coal prices.

The firm has said it plans to use nearly 97 percent of the IPO proceeds to buy five affiliated firms: Adaro Indonesia, Coaltrade Services International, PT Saptaindra Sejati, PT Indonesia Bulk Terminal, and PT Makmur Sejahtera Wisesa.

The shares are due to start trading on the Indonesia stock exchange on Wednesday.