Conglomerate Sugianto Kusuma 'Aguan', Hartono Brothers, Anthony Salim to Peter Sondakh Enter the Capital Market through 'Backdoor' aka Backdoor Listing

Illustration. (Photo: Doc. Antara)

JAKARTA - In the current capital market, corporate actions are rife in which large companies acquire small issuers. The latest example is the Agung Sedayu Group which entered the Indonesian capital market by annexing a low-cap issuer PT Pratama Abadi Nusa Industri Tbk (PANI).

It is PT Multi Artha Pratama, a subsidiary of property giant Agung Sedayu owned by conglomerate Sugianto Kusuma 'Aguan' which announced it had acquired 328 million shares or 80 percent of the total stake in PANI, a manufacturer of metal containers in the form of cans.

Previously, an e-commerce company, PT Global Digital Niaga or better known as Blibli from the Djarum Group belonging to the Hartono Brothers conglomerate, had also submitted a plan to take over a 51 percent stake in PT Supra Boga Lestari Tbk (RANC), which was said to be the company's efforts to develop its business ecosystem.

The two actions of the big companies, allegedly by investors and market players, are strategies for listing through backdoor listings on the Indonesia Stock Exchange (IDX). Backdoor listing is an acquisition action carried out by a private company to a company whose shares are listed on the stock exchange.

In most cases, a company that wants its shares listed for trading on an exchange will go through an initial public offering (IPO), whereas a backdoor listing scheme allows companies to list shares on a public exchange by avoiding the traditional IPO process.

Although uncommon, private companies sometimes prefer backdoor listings to avoid the time-consuming and costly IPO process, and the complicated administrative process.

Backdoor listing itself is not a new scheme, it is noted that several large companies have chosen this path to become a public company, ranging from conglomerate Anthony Salim to Peter Sondakh.

Here are some backdoor listings that have been carried out in the Indonesian capital market:

1. PT Indoritel Makmur Internasional Tbk (DNET)

The issuer's main business is investing in the consumer and retail industry in Indonesia, which is also the manager of the Indomaret mini market network. However, before transforming into a retail issuer, DNET was originally a small-scale internet service provider or ISP named PT Dyviacom Intrabumi Tbk.

This issuer's fate changed 180 degrees after conducting a limited public offering of shares through a rights issue scheme with 14 billion shares at a price of Rp500 per share so that the company was able to raise funds of Rp7 trillion.

The proceeds from the rights issue were then used for business development in three companies belonging to the Salim Group. Around 28.55 percent was invested to buy 35.84 percent of PT Fast Food Indonesia Tbk (FAST) shares.

Then, 30.45 percent was used to buy 31.50 percent of PT Nippon Indosari Corpindo Tbk (ROTI) shares, while 3.35 percent was used for working capital.

Furthermore, the remaining 37.65 percent of the proceeds from the rights issue will be allocated to buy 40 percent of the shares of PT Indomarco Prismatama, the Indomaret management company that has not yet been listed on the stock exchange. So, indirectly, Indomaret has been listed on the stock exchange through a backdoor listing scheme.

2. PT AirAsia Indonesia Tbk (CMPP)

PT Indonesia AirAsia (IAA) had indeed canceled its initial public offering (IPO), but the parent AirAsia Bhd managed to find another way to bring its subsidiary into the capital market, namely through PT Rimau Multi Putra Pratama Tbk (CMPP).

CMPP's main shareholder, PT Rimau Multi Investama, controls 76.24 percent. While the remaining 23.76 percent are controlled by the community. Meanwhile, IAA's shareholders are Air Asia Investment Ltd and PT Fersindo Nusaperkasa.

CMPP at that time issued new shares with a limited public offering (PUT I) with rights issue of 13.65 billion shares with an exercise price of Rp250 per share and a dilution ratio of 97.97 percent.

Air Asia Investment Ltd and PT Fersindo Nusaperkasa as standby buyers will absorb the new CMPP shares. Meanwhile, Rimau Multi Investama as the main shareholder will not take part in the rights issue.

With the rights issue share price, CMPP pocketed funds of around Rp3.4 trillion. Around 76 percent of the funds will be used to take over IAA's perpetual securities (securities) worth Rp2.6 trillion.

3. PT Eagle High Plantations Tbk (BWPT)

PT Eagle High Plantation Tbk (BWPT) formerly known as PT BW Plantation Tbk. This palm oil company conducted a rights issue with a ratio of 1:6 at a price of Rp400 shares with total proceeds of up to Rp11 trillion.

This action This corporate action was carried out after Peter Sondakh through PT Rajawali Capital Internasional acquired 51 percent of BW Plantation's shares in 2014.

This corporate action is used as a vehicle for the Rajawali Group to include its palm oil company, which is one of the companies with the largest land area in Indonesia, to the stock exchange.

The funds from the issuance of the new shares were then used by BW Plantation to acquire Peter Sondakh's Green Eagle Group with a transaction value of Rp10.53 trillion.