PT Pertamina Geothermal Energy Tbk., one of the largest geothermal companies in Indonesia and globally, will carry out an initial public offering (IPO) by releasing a maximum of 25% of the issued and fully paid capital to the public after the IPO.
Pertamina Geothermal Energy (PGE) held a public expo in Jakarta on Tuesday, January 31, 2023. The company, which has full support from the holding company PT Pertamina (Persero), has received an effective statement letter from the Financial Services Authority (OJK) on February 16, 2023.
From January 31 to February 9, 2023, there will be a series of bookbuilding or roadshows. PGE will release a maximum of 10,350,000,000 (10.35 billion) common shares at an initial offering price of around IDR 820-IDR 945.
PGE intends to raise up to IDR 9.78 trillion through an initial public offering. The company will use the IPO proceeds in a variety of ways, one of which is for capital expenditures (capex).
PGE also allocates a maximum of 1.50 percent, or 630,398,000 (630.39 million) shares of issued and fully paid capital after the public offering, for the share purchase option program for management and employees. This policy is in accordance with circular shareholder resolutions on January 27, 2022.
The period for the initial public offering of PGE shares is scheduled to take place from February 20 to 22, 2023. The initial listing on the main board of the Indonesia Stock Exchange (IDX) will take place 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.
President and Director of Pertamina Geothermal Energy Ahmad Yuniarto explained that the company is one of the largest geothermal companies in Indonesia and globally as measured by installed capacity. PGE's solid prospects are also supported by a large reserve and resource base.
Ahmad said PGE has a big role for both Pertamina and Indonesia. PGE currently manages 13 geothermal working areas (WKP) spread over 6 areas with an installed capacity of 672 MW, which are operated alone, and as much as 1,205 MW is managed through a Joint Operation Contract (JOC).
The geothermal installed capacity in the PGE work area contributes to around 82% of the total installed geothermal capacity in Indonesia, with a potential CO2 emission avoidance of around 9.7 million metric tons per year. PGE's use of geothermal energy has succeeded in electrifying 2,085,000 homes in Indonesia.
Pertamina Geothermal Energy also has the ambition to increase its installed capacity base from the current 672 MW to 1,272 MW in 2027. This step is consistent with the company's goal of becoming a leading environmentally friendly energy company.
"PGE has a solid and proven track record of developing geothermal and power plants," Ahmad explained to the media in Jakarta on Tuesday, January 31, 2023.
SOLID PROSPECTS
Pertamina Geothermal Energy has a track record of solid financial performance. The company's revenue reached US$287 million by the end of the third quarter of 2022, or grew 3.9% year-on-year (yoy).
This revenue growth report continues the positive trend of the company's top-line performance in the last 3 years, or in the 2019-2021 range. Annual revenue was recorded at US$328 million in 2019, US$354 million in 2020, and US$369 million in 2021.
In line with revenue growth, PGE posted a significant increase in net profit of 67.8% on an annual basis to US$111 million in September 2022. The net profit margin (NPM) also shot up, from 24% in quarter III, 2021, to 38.8% at the end of quarter III, 2022.
PGE's solid performance is supported by long-term contract agreements, or an average of over 20 years, with PT Perusahaan Listrik Negara (Persero) or PLN as the sole offtaker. This position also ensures predictable cash flow.
"PGE has a good and extensive relationship with PLN and has historically been able to renegotiate existing contractual rates with PLN," he explained.
A solid financial track record is PGE's capital to seize opportunities in the geothermal industry going forward. Wood Mackenzie estimates up to 3.4 GW of additional geothermal capacity over the next decade.
Ahmad added that PGE's big commitment to ESG is also in line with the national decarbonization agenda. The Indonesian government has published a roadmap for achieving net zero emissions (NZE) in 2060.
Great support for PGE also came from the government through the Ministry of State-Owned Enterprises. SOE Minister Erick Thohir previously mentioned the huge geothermal potential in Indonesia, which can reach 24 GW when converted to electricity.
Erick said that support for PGE also aims to create environmentally friendly electricity at competitive prices. It is also hoped that the presence of geothermal energy will not add to the burden on the government for electricity production costs.
