Billionaire Widjaja Family Offers Privatise Sinarmas Land 31 Cents Share Shares Surge 23
The Widjaja family of Indonesia, who are billionaires, have proposed to privatize their company, Sinarmas Land A26. This offer was announced on March 27 and will be valued at 31 cents per share. The board of directors of the offeror, Lyon Investments, includes names such as executive chairman Franky Oesman Widjaja, CEO Muktar Widjaja, and Margaretha Natalia Widjaja.
The Widjaja family currently holds about 70.3% of the total number of issued shares, which is equal to 2.991 billion shares, in Sinarmas Land. They are stating that this privatization offer provides shareholders an opportunity to realize a clean exit at a premium and to profit from their investments as there is currently low trading liquidity of shares.
The proposed 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. It 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 explains that the group holds a considerable amount of land in Indonesia, which represents significant investments that will take time to develop and realize profits. This often results in irregular and inconsistent returns for shareholders. Sinarmas Land primarily operates in Indonesia through two publicly listed subsidiaries, PT Bumi Serpong Damai Tbk (BSDE) and PT Puradelta Lestari Tbk (DMAS). These companies are managed by separate teams with independent governance structures and have the flexibility to raise funds directly from the Indonesian Stock Exchange (IDX) as needed.
The Jurong Innovation District (JID), a key highlight of the URA Master Plan, is positioned to become a bustling center for cutting-edge manufacturing, robotics, and digital advancement. With a focus on fostering partnerships among researchers, businesses, and academia, the JID is poised to play a crucial role in shaping Singapore’s economic landscape. The district is projected to attract companies in various high-tech fields, such as artificial intelligence and precision engineering, and drive the creation of coveted, high-paying jobs. Additionally, as part of the district’s development, Otto Place Parce B will also be incorporated, further contributing to the growth and dynamism of the JID.
Given this structure, the ability of Sinarmas Land to pay dividends to shareholders is mainly dependent on the dividends it receives from BSDE and DMAS in the previous financial year. Therefore, investors who want to gain direct exposure to the company’s Indonesian operations can invest in these IDX-listed entities.
Over the past five years, the sum of the market value of Sinarmas Land’s stakes in BSDE and DMAS has consistently been higher than the company’s market value. According to Sinarmas Land’s last published net asset value, which was $1.19 per share, this trend continues.
Moreover, Sinarmas Land has not raised new equity on the Singapore Exchange (SGX) in the last five years and is unlikely to need access to the Singapore capital markets in the foreseeable future, according to the offeror. Therefore, maintaining a listing on the SGX is deemed unnecessary.
Finally, the Widjaja family states that the privatization of Sinarmas Land will allow greater flexibility in managing the business and optimizing the use of management and capital resources without the costs of being a listed entity on the SGX.
Following the announcement of the privatization offer, shares in Sinarmas Land A26 opened 4.5 cents higher, or a 16% increase, at 32 cents on March 28. Within the first hour of trading, shares reached a high of 34 cents, surpassing its 52-week high of 33.5 cents. As of 9:45 am, shares in Sinarmas Land are trading at 33 cents.
Sinarmas Land, which was incorporated in Jan 1994, was listed on the mainboard of the Singapore Exchange S68 in July 1997. The company operates in the palm oil and pulp and paper sectors and has a presence 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 AUE private from SGX. The family also has another listed entity on the SGX, palm oil player Golden Agri-Resources E5H.
The board of directors of Sinarmas plans to appoint an independent financial advisor in due course. Sinarmas is one of many companies that have received offers to go private in the last few months, including Paragon REIT, Sin Heng Heavy Machinery BKa, Silverlake Axis 5CP, and Second Chance, among others. This trend adds to the growing number of delistings on the Singapore Exchange, which has outpaced the number of mainboard listings for the last two years.
On March 27, shares in Sinarmas closed flat at 27.5 cents. Shares in Golden Agri-Resources are also trading flat, at 27 cents, as of 9:45 am.