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JAKARTA (TheInsiderStories) – Indonesian retail group and conglomerate Lippo Group has announced a plan to issue new shares in the first quarter of next year to fund business expansion and expedite working capital.

Industrial township developer Lippo Cikarang, multi-format retail operator Matahari Putra Prima and urban developer Lippo Karawaci plan pre-emptive rights issuances in 1Q of 2018, with projected proceeds of around Rp 1 trillion (US$73.8 million) for each company.

Lippo Cikarang shareholders have approved the rights issuance plan at an extraordinary meeting on Nov. 8. The company, which has developed an integrated real estate and light industrial park at Cikarang in Bekasi, West Java, will issue new shares at Rp 3,800 apiece, hoping to raise around Rp 800 billion.

If shareholders decide not to exercise their rights, their shares will be diluted by 27.04 per cent. The company will use the proceeds of the rights issue for business and working capital.

Lippo Cikarang President Director Ivan Budiono said in a statement that the company aims to complete its rights issuance plan in the first quarter of next year.

‘The plan is carried out as a step by the company to generate the capital necessary to fund the development of company business, while at the same time maintaining a prudent balance sheet profile,’ Ivan was quoted as saying, in Jakarta Globe.

The developer controls a 3,250-hectare township, supported by various facilities, such as schools, hospitals, shopping malls and restaurants. The company is currently developing Meikarta, an integrated township project expected to become a residential and new growth center, 40 kilometers east of Central Jakarta.

The Rp 278 trillion project is also expected to have a multiplier effect in the region.

Meanwhile, Lippo Karawaci plans to hold a rights issue in the first quarter of 2018 to raise Rp 600 billion, which will be used to fund business expansion and strengthen its capital. The shares will be sold at Rp 635 apiece.

According to Lippo Karawaci President Director Ketut Budi Wijaya, the rights issuance plan will be subject to approval by a general shareholders’ meeting on Friday (15/12). Shareholders who do not participate in the rights issue will see their ownership diluted by 5.99 per cent.

‘The rights issue will maintain its debt-to-equity ratio at a reasonable level. The company will continue to maintain its cash flow prudently, monitoring the company’s costs and implement a capital recycling strategy that will boost company value,’ Ketut said.

Matahari Putra Prima also plans to issue 3 billion new shares in the first quarter of next year, with proceeds used to refinance debt and serve as working capital.

Shareholders who choose not to exercise their rights will see their stocks diluted by 30.4 per cent.

Matahari has yet to set the date of its general shareholders’ meeting to seek shareholder approval. The retail network operates a network of more than 300 distribution points in 73 cities across the archipelago, 117 hypermarkets, 26 supermarkets, 30 convenience stores and 12 health and beauty centers.

The company has partnered with 3,168 food and retail suppliers and serves more than 15 million Indonesians annually. (*)

Written by Elisa Valenta, email: elisa.valenta@theinsiderstories.com