The billionaire Indonesian Widjaja family has made an offer to privatise its company Sinarmas Land for 31 cents per share, according to a bourse filing earlier on March 27.
The offeror, Lyon Investments, includes executive chairman Franky Oesman Widjaja, CEO Muktar Widjaja and Margaretha Natalia Widjaja among its directors.
It holds about 70.3% of the total number of issued shares, or 2.991 billion shares in Sinarmas Land.
The family says that the privatisation offer is an opportunity for shareholders to realise a clean exit at a premium, and to realise their investments amid low trading liquidity of shares.
The current offer price of 31 cents per share represents a 12.7% premium over the last traded price of 27.5 cents per share on March 24. This is also a premium of 17.1%, 5.6%, 0.5%, 14.6%, 16.8% and 18.5% over the volume weighted average price (VWAP) of the shares over the one, three, six, 12, 24 and 36-month periods respectively.
The offeror adds that the group currently holds a significant amount of land especially in Indonesia which represents major amounts of invested capital which will take time to develop and realise, which can result in irregular and variable realisation of profits.
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In Indonesia, Sinar Mars Land operates mainly through two directly held publicly listed Indonesian subsidiaries namely, PT Bumi Serpong Damai Tbk (BSDE) and PT Puradelta Lestari Tbk (DMAS).
BSDE is the largest shareholder of Dana Investasi Real Estat Simas Plaza Indonesia, a real estate investment trust listed on the Indonesia Stock Exchange (IDX).
Other IDX-listed entities controlled by the Group comprise PT Duta Pertiwi Tbk and PT Suryamas Dutamakmur Tbk.
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The listed entities on the IDX are managed by separate management teams with independent governance structures and retain their own flexibility to raise funds directly from the IDX and other sources, if needed.
Given this structure, the ability of the company to pay dividends to the shareholders in any given financial year is significantly dependent on the dividends it receives from BSDE and DMAS in the preceding financial year.
Therefore, investors who wish to gain direct exposure to the Indonesian operations are also able to do so by investing in the IDX-listed entities.
Over the past five years, the sum of the market value of the stakes in BSDE and DMAS has been consistently above the market value of Sinarmas Land.
Sinarmas Land's last published net asset value was $1.19 per share.
Also, the company has not raised new equity on the SGX in the last five years, and is also unlikely to require access to Singapore capital markets to finance its operations in the foreseeable future, the offeror notes.
“Accordingly, it is not necessary for the company to maintain a listing on the SGX-ST,” it adds.
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Finally, the Widjaja family says that the privatisation of the company will give it more flexibility to manage the business and optimise the use of its management and capital resources without the costs of being a listed entity on the SGX.
Sinarmas was incorporated in Jan 1994, and listed on the mainboard of the Singapore Exchange in July 1997.
It is engaged in the palm oil and pulp and paper sectors, operating as well in real estate, financial services, agribusiness, telecommunications and mining across Indonesia, China, Malaysia, Singapore and the United Kingdom.
In 2023, the family took coal miner Golden Energy and Resources private from SGX. The family has another listed vehicle on the SGX in the form of palm oil player Golden Agri-Resources .
The board of Sinarmas says that it will appoint an independent financial advisor in due course.
Sinarmas joins a group of companies that have received offers to be taken private in the last couple of months, including Paragon REIT, Sin Heng Heavy Machinery , Silverlake Axis , Second Chance, among others.
These offers continue to add to the trend of growing number of delistings on the Singapore Exchange, which have for the last two years outpaced the number of mainboard listings.
Shares in Sinarmas closed flat at 27.5 cents on March 27.
