Indonesia’s Inalum mandates UBS, BNP Paribas, and Citi for USD 500m IPO

Breaking News 10 May

Indonesia’s Inalum mandates UBS, BNP Paribas, and Citi for USD 500m IPO

PT Indonesia Asahan Aluminum (Inalum), an Indonesia state-owned aluminum smelting business, has appointed UBS, BNP Paribas, and Citi, to arrange its up to 500m initial public offering (IPO), two sources familiar with the situation said.

The IPO could be launched in the third quarter this year at the earliest, according to the first source. Such timing, however, might be “too optimistic” given that investors might take a “wait-and-see” approach as Indonesia goes back to polls in February 2024 to elect President Joko “Jokowi” Widodo’s successor, said the second source.

Inalum, UBS, and BNP Paribas did not respond to requests for comments. Citi declined to comment.

As reported by this news service in April, Inalum aims to use the proceeds to repay debt and for capital expenditures.

In a local media report in April, Investment Minister Bahlil Lahadalia said investors are “still on the fence” about investing in the country, waiting for policy guidance from the next administration.

Jokowi, who has less than a year left in his final term as president, has prioritized pandemic recovery, infrastructure investment, and human capital development, according to the US Department of State’s investment climate statement on the country in 2022. During Jokowi’s term, Indonesia replaced its 2016 Negative Investment List with “priority investment list” in February 2021, liberalizing nearly all sectors to foreign investment, it added.

The company, which produces aluminum ingots, billets, and foundry, has a production capacity of 250,000 tons, local media reported. It aims to quadruple the capacity to one million tons, backed by government policy to ban exports of bauxite ore beginning June 2023. Such ban is part of Indonesia’sefforts to further downstream its mining industry as it seeks to leverage the country’s abundant commodities resources to build a supply chain for the electric vehicle industry at home rather than being just a raw-material exporter.

Mining Industry Indonesia (MIND.ID), the state-owned mining industry holding company, owns 100% of Inalum, following the government’s reorganization of its mining-related assets in December 2022. MIND.ID also owns 65% of gold and nickel miner PT ANTAM Tbk [IDX:ANTAM], 51.23% of copper producer PT Freeport Indonesia, 65% of metal producer and exporter PT Timah Tbk [IDX:TINS], and 20% of iron ore and nickel miner PT Vale Indonesia Tbk [IDX:INCO], according to its website.

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