Dec 22, 2010

CIC to join TPG, GIC in Delta Dunia deal

Coal mining contractor PT Delta Dunia Makmur Tbk (DOID) gained 12.16% in the last 3 days, following the take over of its parent, Northstar Tambang Persada Limited (NTP) by TPG Capital and Government of Singapore Investment Corporation (GIC).
Delta Dunia, controls Indonesia's largest coal mining contractor PT Bukit Makmur Mandiri Utama (BUMA), surged 6.72% to Rp1,430 per share.
"Besides TPG and GIC, Chinese Sovereign Wealth Fund China Investment Corporation [CIC] will join the consortium of TPG capital and GIC," several sources said.
CIC might announce its participation to acquire non-voting interest in NTP, controlling shareholder in Delta Dunia with 40% holding, this week or early next week.
"Initially, three parties, TPG Capital, GIC, and CIC intended to acquire the non-voting interest in NTP. However, CIC should be approved by Chinese government, so TPG and GIC took the action first and followed by CIC," the sources said.
A statement from NTP issued last Saturday said a consortium of affiliates and investment vehicles of U.S. private equity firm TPG and the Singapore fund, known as GIC, had made the investment.
"TPG Capital, GIC, and CIC acquire non-voting interest in NTP from Widjaja family, Sinarmas Group, and Bakrie Group at about IDR3.26 trillion," the sources said.
A British Virgin Island-based NTP received a transfer of 40% holding in Delta Dunia from Singapore-based company namely Northstar Tambang Persada Pte Ltd at IDR2.99 trillion or at par of IDR1,100 per share on December 4 2010.
NTP Director Glenn T. Sugita hasn't answered a confirmation sent via a short message service this morning.
TPG Capital is the global buyout group of TPG, a leading private investment firm founded with US$48 billion in assets under management. GIC manages Singapore's foreign reserves. The sovereign wealth fund's portfolio is valued at more than US$185 billion.
CIC provided a US$1.9 billion high cost loan facility to Indonesia's largest thermal coal exporter PT Bumi Resources Tbk (BUMI) late last year.
UBS Investment Research in a company report published on December 6 2010, has raised Delta Dunia's price target from IDR1,940 per share to IDR2,230.The raise of the price target reflects the lower interest expense ahead.
"We continue to derive our price target using discounted cash flow methodology. Our operational assumptions are unchanged," said UBS analyst Felicia Tandiyono in her report.
"We would likely view such sales to third parties positively because it could provide clarity on the ultimate owner of DOID through NTP."

Disclosure: No position at the stock mentioned above.

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