Jan 13, 2011

ELTY to sell 75% stake in Bakrie Toll

Property developer PT Bakrieland Development (ELTY) plans to divest up to 75% its ownership in Bakrie Toll Road (Bakrie Toll), the company’s toll-road operator subsidiary.
Based on news in Investor Daily, the President Director, Hiramsyah Thaib, mentioned that the company plans to IPO a totaling 20%-30% of its ownership through IPO, while the remaining will be divested to strategic partners.
ELTY will assure the majority stakeholder in the company by holding 25% ownership. "Following Avenue Capital Group's non-participation in ELTY’s recent rights issue, we may suspect that the fund may return to the company through the private placement mechanism mentioned above," said Mandiri Sekuritas in a morning note today.
"We note that the fund has been a long-run infrastructure investor in Philippines, while its representative in ELTY’s BoC is also a long-term experienced individual in the industry."
Nevertheless, the time frame of the IPO is still unclear. Based from Mandiri Sekuritas' recent talk with the company, it is indicated that the soonest will be end of 2011, awaiting performance progress of the only recently opened Kanci-Pejagan toll road.
As at end of 2010, Kanci-Pejagan toll road has tapped of an average 15,000/day car traffic, below its initial target of an average 17,000/day.
The company expects the traffic to improve up to average 19,000/day at end of 2011. Kanci-Pejagan toll road is expected to contribute up to 10% of total revenue in our forecast 2011. "We are still reviewing our forecast on the stock."

Disclosure: No position at the stock mentioned above.

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