Offering 25 Percent Of Shares To The Public, Pertamina Geothermal Energy Starting The Bookbuilding IPO Process

Photo: Doc. Pertamina Geothermal Energy

JAKARTA - PT Pertamina Geothermal Energy Tbk, one of the largest geothermal companies in Indonesia and globally in terms of installed capacity, will carry out an initial public offering (IPO) by releasing a maximum of 25 percent of shares to the public from issued and fully paid capital after the IPO.

PT Pertamina Geothermal Energy Tbk (PGE) held a public expose in Jakarta on Wednesday January 1. PGE, which received full support from the parent company of PT Pertamina (Persero), has obtained a Certificate of Announcement of Prospectus Ringkas and/or Implementation of Initial Offers from the Financial Services Authority (OJK) on January 31, 2023.

PGE will carry out the Initial Offer Period on February 1, 2023 until February 9, 2023. PGE will release a maximum of 10,350,000,000 (ten billion three hundred and fifty million) of ordinary shares in the name with an offering price ranging from Rp820 - Rp945.

Through the IPO plan, PGE targets the maximum proceeds of IDR 9.78 trillion. The allocation of proceeds from the IPO implementation will be used by PGE for capital expenditure (capex) and payment of some loan facilities.

PGE also allocates a maximum of 1.50 percent or a maximum of 630,398,000 shares of issued and fully paid capital after the public offering for the Stock Purchase Option Program to Management and Employees (MESOP). This policy is in accordance with the decision of the shareholders in a circular manner on January 27, 2022.

The OJK Effective Letter on the PGE IPO Registration Statement is expected to be obtained on February 16, 2023, so that the initial public offering period of PGE shares is scheduled for February 20, 2023 until February 22, 2023. The listing of the initial shares on the main board of the Indonesia Stock Exchange (IDX) will be held on February 24, 2023.

In the initial public offering, PGE appointed PT Mandiri Sekuritas, PT CLSA Sekuritas Indonesia, and PT Credit Suisse Sekuritas Indonesia as underwriters for the issuance of securities. PGE also appointed CLSA, Credit Suisse, and HSBC as international selling agents.

Pertamina Geothermal Energy President Director Ahmad Yuniarto explained that PGE is one of the largest geothermal companies in Indonesia and globally measured with installed capacity. The solid prospect is that PGE prospects are also supported by large reserves and resources.

Ahmad said PGE has a big role both for Pertamina and Indonesia. PGE currently manages 13 Geothermal Working Areas (WKP) spread across 6 areas with a self-operated 672 MW installed capacity and 1,205 MW managed through a Joint Operation Contract (JOC).

The capacity of geothermal installed in the PGE working area contributes about 82% of the total geothermal installed capacity in Indonesia, with the potential for CO2 emission approval of around 9.7 million tons of CO2 per year. The utilization carried out by PGE from geothermal energy has succeeded in making 2,085,000 houses in Indonesia electrified.

Pertamina Geothermal Energy also has the ambition to increase its installed capacity base from 672 MW to 1,272 MW in 2027. This step is in line with the mission to become a leading environmentally friendly energy company.

"PGE has a solid and proven track record of geothermal development and power generation," Ahmad explained to the media crew.

Pertamina Geothermal Energy has a solid financial performance track record. PGE's revenue reached US$287 million until the end of the third quarter of 2022 or grew 3.9 percent year-on-year (yoy).

This revenue growth report continues the positive trend of PGE's top line performance in the last 3 years or in the range 2019 - 2021. It is recorded that annual revenues are 328 million US dollars in 2019, 354 million US dollars in 2020, and 369 million US dollars in 2021.

In line with revenue growth, PGE posted a significant increase in net profit of 67.8 percent on an annual basis to 111 million US dollars in September 2022. Net profit margin (NPM) also shot from 24 percent in the third quarter of 2021 to 38.8 percent as of the end of the third quarter of 2022.

PGE's solid performance is supported by a long-term contract agreement or an average of more than 20 years with PT Perusahaan Listrik Negara (Persero) or PLN as a single offtaker. This position also ensures the predictable cash flow.

"PGE has a good and wide relationship with PLN and has historically been able to renegotiate existing contractual rates with PLN," he explained.

A solid financial track record becomes PGE's capital to capture opportunities for the earth's p anas industry in the future. Wood Majol estimates an additional 3.4 GW of geothermal capacity in the next decade.

Ahmad added that PGE's great commitment to ESG is also in line with the national decarbonization agenda. The Indonesian government has published a roadmap to achieve net zero emissions (NZE) by 2060.

Great support for PGE also came from the government through the Ministry of State-Owned Enterprises. SOE Minister Erick Thohir previously also mentioned the great potential for geothermal in Indonesia, which reaches 24 GWs if converted into electricity.

Erick said that support for PGE also aims to create environmentally friendly electricity at competitive prices. The existence of geothermal energy is also expected not to increase the government's burden on electricity production costs.