(Feb 4): Companies linked to Indonesian billionaire Prajogo Pangestu said they would buy back shares, in a bid to shore up prices after last week’s market meltdown.
PT Barito Pacific, PT Chandra Asri Pacific and PT Petrindo Jaya Kreasi plan share repurchases of as much as a combined 3.75 trillion rupiah (US$224 million or $290 million), according to filings to the Indonesia Stock Exchange on Tuesday and Wednesday. The companies will buy shares from Feb 4 to May 3.
Shares of Barito Pacific jumped as much as 9.6%, the most since Sept 24, following the announcements. Chandra Asri and Petrindo Jaya Kreasi also gained.
“In light of the recent market volatility, the Group’s management believes that its immediate priority is to help support market stability while reaffirming our full commitment to the group’s long-term strategic business expansion,” said a Barito Pacific spokesperson in an email response for comment. With regards to new requirements to raise minimum free float to 15% from 7.5%, “we are closely monitoring ongoing regulatory developments and will await further regulatory guidance”, the spokesperson said.
The share buybacks come as Indonesia’s market saw its worst two-day rout in nearly three decades at one point last week, spurred by MSCI Inc’s concerns over investability and warning of a potential downgrade to frontier-market status. Prajogo-owned firms were among the hardest hit in the selloff, whose net worth dropped by around US$9 billion ($11.44 billion) after his energy and mining companies slid.
See also: Yangzijiang Maritime seeking shareholders' nod to buy back shares
“The Indonesian tycoons are trying to signal the market that their stocks are cheap. It is a show of confidence,” said John Foo, founder of Valverde Investment Partners Pte Ltd. “The next few weeks will be uncertain due to the MSCI overhang.”
At the heart of MSCI’s concerns is the low free float of Indonesian equities. Many of the country’s largest companies are thinly traded and controlled by a small number of wealthy individuals — a structure that investors say distorts index performance and increases the risk of manipulation. The issue has been a point of contention for years, with critics arguing that low liquidity renders large portions of the market uninvestable and difficult to track.
Companies with concentrated ownership include Petrindo Jaya Kreasi, which is 84% owned by Prajogo, and Barito Pacific, in which he holds a 71% stake, according to their latest filings.
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