HONG KONG-The private equity group CVC Capital Partners, a unit of the Indonesian conglomerate Lippo Group and Singapore’s state investment company on Monday began marketing the sale of a 40 percent stake in Indonesia’s largest department store operator, which could raise the sellers up to 13.13 trillion rupiah ($1.36 billion), according to the term sheet for the deal.
CVC, which is based in London and owns stakes in businesses that include the Formula One racing group, and its co-sellers are seeking to cash in on investors’ optimism that consumer spending power will continue to grow in Southeast Asia’s biggest economy.
CVC, Lippo’s Multpolar unit and the Government of Singapore Investment Corp., or G.I.C., are selling 1.17 billion existing shares in PT Matahari Department Store for 10,000 rupiah to 11,250 rupiah, according to a sale document. The price range represents total proceeds of $1.21 billion to $1.36 billion.
At the high end, the deal values Matahari at $3.4 billion, or nearly four times the $892 million valuation, including debt, at which CVC and its fellow investors acquired the department store operator in 2010.
Matahari, which opened its first shop in 1958 and today operates 116 stores in more than 50 Indonesian cities, saw its gross revenue increase 17.7 percent to 10.88 trillion rupiah last year, as demand rose among Indonesia’s growing middle class for clothing and cosmetics from brands like Polo, Clinique, Revlon and Levi’s, which Matahari sells on consignment. Same-store sales have grown at a double-digit pace for at least the past three years and rose 11.1 percent in 2012.
The deal is receiving strong support from so-called cornerstone investors â€" big institutions or wealthy individuals who agree to make a large investment in exchange for a guaranteed allocation of shares.
Two people with direct knowledge of the plan, who were not permitted to speak publicly on the matter, said CVC and G.I.C. had agreed to sell about $435 million worth of shares, representing about 32 percent of the overall deal, to 15 cornerstones. Those investors include: Azentus, Blackrock, Capital Research and Management, Fidelity, the asset management units of Morgan Stanley, Och-Ziff, Schroders and T. Rowe Price.
As part of the deal, G.I.C. will also purchase a stake of about 1.8 percent in the cornerstone offering, reducing its net ownership of Matahari to less than 10 percent from its current indirect holding of about 14 percent.
The sale does not involve any new shares, but is being managed like an initial public offering because only 2 percent of Matahari’s stock is now freely traded. On completion â€" and assuming a so-called ‘‘greenshoe’’ option to sell an additional 175 million existing shares is fully exercised â€" the department store operator will be 48 percent owned by the public, 31 ! percent b! y CVC and G.I.C., 20 percent by the Lippo unit and about 1 percent by management.
Final pricing for the share sale is expected to be set on March 22. CIMB, Morgan Stanley and UBS are the coordinators of the deal.
