Gallant Venture Ltd. (GALV), an investment holding company, will buy majority control of Indonesian automotive retailer PT Indomobil Sukses Internasional (IMAS) for $809.3 million to tap growth in Southeast Asia’s largest economy.
Gallant will pay 5,420 rupiah per share for a 52 percent stake from PT Cipta Sarana Duta Perkasa, a 1.3 percent premium to yesterday’s closing price, the Singapore-based company said in a stock exchange filing today. Gallant shares surged as much as 13 percent and the company will also have to buy the Indomobil shares it doesn’t own, valuing the auto retailer at 15 trillion rupiah ($1.55 billion).
Vehicle sales in Indonesia increased 15 percent in the first 11 months, according to data compiled by Bloomberg, as economic expansion boosted personal incomes and encouraged consumer spending. The Southeast Asian country’s growth may accelerate to 6.5 percent in 2013 from an estimated 6.3 percent this year as domestic consumption helps offset slowing exports, according to the central bank.
“With foreign direct investment coming into Indonesia and income increasing, demand for vehicles are expected to be positive,” said Adrian Joezer, an analyst at PT Mandiri Sekuritas in Jakarta who has a buy rating for Indomobil. He expects vehicle demand in Indonesia to grow 9 percent to 10 percent next year.
Shares of Gallant rose as much as 13 percent before trading at 29 Singapore cents as of 12:25 p.m. in Singapore trading. Indomobil declined 0.9 percent to 5,300 rupiah in Jakarta.
The 5,420 rupiah per share price represents a multiple of 12.4 times 2013 estimated earnings-per-share.
The deal will be funded with a S$675 million ($553 million) rights issue with Gallant selling one share to existing investors at S$0.28 apiece for each share they already own, according to the statement. The company will also borrow about S$128.2 million from financial institutions, and raise S$80 million from a convertible bonds issue and S$104.7 million from a non-convertible bonds issue.
“The acquisition presents an opportunity for shareholders to participate in Indonesia’s growing middle-class retail and industrial segments,” Gallant said in the statement. “The investment is also expected to provide the group with access to the financial sector, which is considered to have attractive growth potential.”
Indomobil Sukses is one of the two largest automotive groups in Indonesia, according to Gallant. Its primary business includes vehicle sales distribution, after-sales service and vehicle-ownership financing. The company manages brands including Audi, Nissan, Renault and Suzuki.
CIMB Bank Bhd. and UOB Kay Hian (UOBK) Pte were the advisers for the stake acquisition and the rights offering.
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