- Indonesia’s Adaro Energy, the world’s sixth-largest coal miner, will sell its unit PT Adaro Andalan (AAI) in an initial public offering worth up to 4.594 trillion rupiah.
- Adaro Energy is looking to support its decarbonisation and net zero emission targets through efforts such as focusing on its green business in a shift away from thermal coal operations
Indonesia’s Adaro Energy, the world’s sixth-largest coal miner, will sell its unit PT Adaro Andalan (AAI) in an initial public offer worth up to 4.594 trillion rupiah ($291.6 million).
It will offer as many as 778.7 million shares, or 10 per cent of AAI’s outstanding shares, at between 4,590 rupiahs and 5,900 rupiahs each, valuing the thermal coal miner at up to $2.92 billion.
That valuation reflects about 38 per cent of the parent’s current market capitalisation of 119.7 trillion rupiah ($7.59 billion), according to LSEG data.
It is higher than the valuation of roughly $2.45 billion ascribed to AAI in October when Adaro Energy said it could sell all its shares in AAI to existing stakeholders.
Adaro Energy is looking to support its decarbonisation and net zero emission targets through efforts such as focusing on its green business and shifting away from thermal coal operations while also cleaning up its balance sheet.
The company said AAI has seven thermal coal assets in Sumatra and Borneo islands and supports businesses related to coal mining. Five of these had total estimated reserves of 914.7 million metric tons by June this year. The parent company said in October that AAI’s total assets represent more than half of Adaro Energy’s assets.
The planned spin-off would allow it to seek more competitive funding for green projects, it added. Adaro Energy is building an aluminium smelter, and its hydropower plant is in the pre-construction stage.
Christina Ng, managing director at nonprofit energy finance thinktank Energy Shift Institute, said in a September note that Adaro’s move to spin off the coal business sent strong signals to both domestic and international markets. She added that the move would face intense scrutiny, however, particularly as it unfolds through a public offering.
The book-building process for the IPO will run from November 12 to November 18. No date has been set yet for the AAI listing on the Indonesian stock exchange. Trimegah Sekuritas Indonesia is the underwriter for AAI’s IPO. Adaro shares gained as much as 4.3 per cent to 3,900 rupiah each.