Toba Bara Sejahtra, an Indonesian coal miner which made its stock trading debut on Friday, is considering bank loans to help it finance its coal mining acquisitions after it cut the size of its initial public offering.
Toba Bara, founded by former Trade Minister Luhut B. Pandjaitan in 2010, raised Rp 400.3 billion ($43 million) from selling 210.68 million shares, or 10.5 percent of its total capital, to the public last week.
The company cut its initial public offering size from the plan of “as much as” 15 percent that it initially aimed for, citing a low valuation on volatile global market. It set the IPO price at Rp 1,900 per share last week.
Less than the originally planned IPO would result in a shift on the company’s expansion plan, said Pandu Sjahrir, the finance director at Toba Bara.
“If there is a change, it will be on the acquisition [funding],” Pandu said on Friday after the company’s debut on the Indonesia Stock Exchange. “If we go ahead with the acquisitions, we might need bank loans,” he added.
The company is scouting three to four mining projects in East Kalimantan, Pandu said, with minimum coal reserve of 10 million metric tons for each mine. The new mines will add to the total 236 million tons of reserves it currently has through three subsidiaries.
Pandu did not provide any details on the acquisition. He did say, though, that the company was targeting coal mining facilities located Kutai Kertanegara, East Kalimantan. Toba has three coal mining sites in the region.
“If we can get a mine close to our location, we don’t need to invest much in building new infrastructure and facilities. We can just easily connect it to our existing infrastructure,” he said.
The company will use more than half of the funds generated from its IPO to finance capital expenditure which will focus on exploration of the firm’s mining area.
Pandu said the company had 7,087 hectares in exploration and half of it has not been investigated.
The company expects to increase production this year to 7.6 million tons from 5.2 million tons in 2011, and it is targeting 12.1 million tons of coal production by 2014.
A Hong Kong-based private equity fund, Baring Private Equity Asia, bought more than 50 percent of the company’s stake during the IPO last week, making it the largest investor in Toba’s IPO.
Baring has $5 billion in funding under its management.
Pandu claimed that Baring’s investment in Toba would be “Baring’s biggest investment in Indonesia.”
Shares of Toba opened at Rp 1,920 on its debut on Friday, up from the Rp 1,900 offering price. The stock jumped through the remainder of the trading day and closed at Rp 2,125, or 12 percent higher than its IPO price.
“The anchor investors helped build investor confidence in Toba,” said Imam Rachman, a director at Mandiri Sekuritas, one of the underwriters for the IPO. “You can see it in the trading debut, which went pretty well.”