19/09/2012 (Jakarta Globe) - Provident Agro, a plantation company partly owned by private equity firm Saratoga Group, is seeking to raise up to Rp 655 billion ($69 million) from its initial public offering and plans to use the proceeds to finance its expansion.

On Monday, the company announced it intended to sell 1.42 million shares, representing 25 percent of the company, in an IPO next month. The company set its offering price at Rp 420 to Rp 460 per share, said Moelionoto, managing director of Indo Premier Securities, one of the float’s underwriters.

The shares will be offered on Oct. 2-3 and are scheduled to be listed on Oct. 9. The company will be the 16th to list on the Indonesia Stock Exchange (IDX) this year.

About 85 percent of Provident’s IPO proceeds will be used to finance capital expenditure, including on land clearance, tree planting and construction of infrastructure and supporting facilities at its estates. The remaining 15 percent will be used as working capital.

Provident is the holding company of 11 palm plantation companies in Sumatra and Kalimantan, with total planted area at 42,759 hectares and land bank at 50,476 hectares.

Five of the plantation companies were recently acquired. Provident also controls three palm oil factories.

Devin Antonio Ridwan, a director at Provident, said the company aimed to sell 70,000 to 72,000 metric tons of crude palm oil this year. He did not say how much was sold last year. In 2011, it produced 36,873 tons of CPO.

In the first quarter the company posted net loss of Rp 77 billion, citing foreign-exchange losses, compared to net income of Rp 18 billion in the same period last year.

“We are optimistic that the company will post a profit next year,” Devin said.

Moelionoto said the underwriters were considering targeting local investors. Provident has hired Indo Premier Securities and DBS Vickers Securities Indonesia to manage the share sales.

After the IPO, Moelionoto said that the current shareholders — Saratoga Sentra Business, controlled by businessman Sandiaga Uno, and Provident Capital Indonesia — will likely maintain their stakes.