Pertamina Geothermal Energy's IPO Is Considered Appropriate, Observers: More Strategic Compared To Funding Through Banking

Photo: Doc. Antara

JAKARTA - BUMN observer Toto Pranoto said that the initial public offering (IPO) of PT Pertamina Geothermal Energy (PGE) has important and strategic value for the company.

"Not only for additional capital, an IPO can also improve the company's performance to make it even better," said Toto in a written statement, quoted from Antara, Thursday, February 23.

This strategic value, he said, was because as a grandson of Pertamina's company, PGE is a big player in the geothermal energy sector so PGE certainly needs a quite large business capital or "capex" to build strength.

Moreover, he said there was a plan to merge the BUMN geothermal business in which PGE was the strongest candidate as a "holding".

"That's why this IPO is important and strategic for PGE," said Toto.

According to him, funding through an IPO is also suitable for PGE because equity through an IPO is long-term, in accordance with the characteristics of geothermal projects which are also long-term.

"With such characteristics, IPO is considered more suitable than funding through banks," he said.

Toto also believes that PGE's entry into the stock exchange will have a positive impact on the company's performance. In addition to funding, public companies are also required to improve performance.

"This IPO is not only for 'fund raising' but also with an open status, it is hoped that the company's performance can be better because of greater demands for 'good corporate governance' (GCG), " said Toto.

As a public company, he continued, PGE can become a company that is healthier and cleaner from illegal and unlawful practices because there is supervision from regulators and public investors.

He is also optimistic about PGE's prospects after becoming a public company. According to him, investor interest should be high because PGE is part of a company developing renewable energy. This sector is in line with the world trend which is increasingly aggressively implementing the energy transition so that the potential is good.

In addition, Toto also assessed that PGE's IPO was not a privatization because the shares released to the public were only around 25 percent. Thus, Pertamina still holds control over the company's policies and operations.

"PGE's IPO is a corporate action that is commonly carried out by companies, both private and BUMN," he said.

He also gave an example of SOEs that were successful when they became public companies, namely the sale of shares by issuers SMGR or Semen Indonesia which turned out to be many times over from the initial IPO. Not only SMGR, he said, a number of BUMNs have also succeeded in achieving "market capitalization".

"In fact, several BUMN shares have become 'blue chips' on the Indonesian stock exchange, such as Telkom, Bukit Asam, Aneka Tambang, BRI, and others," said Toto.