Gold standard
Copper and gold miner Amman Mineral Internasional stole the thunder away from deals in bigger markets through a Rp10.7trn (US$714m) IPO that came at a challenging time but brought investors handsome returns.
Indonesia’s IPO market had a robust start to 2023 with two nickel producers raising almost Rp19trn combined in the first four months, as investors looked for exposure to the electric vehicle value chain. Amman, which had been planning a listing for years, decided to launch its deal in late May.
The company was confident that it would benefit from ESG trends. Many renewable energy systems use more copper than traditional power systems and copper is also used in EV batteries, electricity and telecommunications systems.
With such wide usage and a shortage of global copper assets, the IPO was attractive to both domestic and international investors.
Amman operates the Batu Hijau copper and gold mine in Indonesia and its other asset, Elang Deposit, is one of the world’s largest known undeveloped porphyry copper and gold deposits.
The IPO, South-East Asia’s largest in 2023, was also supported by solid copper and gold prices and Amman’s strong earnings growth.
Amman posted a net profit of US$149m for the first two months of 2023, up 49% from a year earlier. Its full-year profit in 2022 was US$1.1bn, up 243% from 2021.
All these positive factors persuaded investors to participate in the transaction even though Amman was yet to receive final approval from the Indonesian government to export copper concentrates at the time of the IPO.
That did not dent investors’ enthusiasm and demand was even strong enough to allow the company to partially upsize the deal.
Amman Mineral sold 6.33bn shares, or a 8.8% stake, at a fixed price of Rp1,695. The transaction comprised a base deal of 6.29bn primary shares with an upsize option of 998m. The IPO price translated into a forecast 2024 P/E of around 9 compared with the industry range of 6x–13x.
Around 30 investors, including regional institutions and a large global commodity company, participated in the transaction and the top 10 were allocated 70% of the book.
The deal was one of the best performing IPOs globally in 2023, despite a decline in sentiment towards the EV sector later in the year.
Amman received the government export approval just ahead of its listing debut on July 7, which saw it end the day 3.5% higher. The stock continued to rise and finished the year 286% higher at Rp6,550.
Subsequent Indonesian IPOs failed to match Amman’s success, with some other deals being shelved.
BNI Sekuritas, CLSA Sekuritas, DBS Vickers Sekuritas and Mandiri Sekuritas were the joint lead underwriters. CLSA, DBS Bank and Jefferies were the international selling agents.
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