In a resounding market debut, Indonesia's Barito Renewables Energy saw its shares surge by 25% during Monday morning trading on the Indonesia Stock Exchange. This remarkable performance followed the company's successful initial public offering (IPO), which raised a substantial 3.13 trillion rupiah (approximately $200 million) in funding just a week prior.
The opening bell witnessed Barito Renewables Energy's shares climbing to 975 rupiah each, marking an impressive 25% increase from their IPO price of 780 rupiah, which was already at the upper end of the IPO price range. This exceptional rise in share value triggered an IDX upper limit transaction restriction, which remained in effect for a significant two hours after the market opened.
Barito Renewables Energy, a subsidiary of the Indonesian energy conglomerate Barito Pacific, offered more than 4 billion shares to the public, representing a 3% stake in the company.
This listing not only underscores the growing interest in Indonesia's relatively nascent renewable energy sector but also serves as a test of investor appetite in the lead-up to the country's presidential and legislative elections scheduled for the following year, a period typically characterized by subdued corporate activity.
The successful IPO comes on the heels of a similar offering by Pertamina Geothermal Energy (PGE), a subsidiary of Indonesia's state-owned oil and gas giant Pertamina. PGE raised a substantial 9.056 trillion rupiah in its February IPO, with its shares experiencing a mostly flat trajectory in the initial months of trading. However, they have since nearly doubled in value, closing at 1,600 rupiah on the previous Friday.
Barito Renewables Energy plays a critical role in the renewable energy landscape as a contractor for PGE. The company operates three geothermal power plants in West Java province, boasting a combined installed capacity of 886 megawatts. Notably, PGE exclusively supplies electricity to the state utility Perusahaan Listrik Negara, which holds a monopoly over Southeast Asia's largest economy's power grid.
Tan Hendra Soetjipto, CEO of Barito Renewables Energy, celebrated the company's remarkable journey in a speech at the IDX just before trading commenced. He highlighted the company's growth, stating, “Barito Renewables started with 110 megawatts and currently operates 886 megawatts of electricity from geothermal. Barito Renewables' IPO is expected to be the valuation benchmark for renewable energy companies.” Soetjipto emphasized the company's commitment to providing clean and renewable energy solutions to reduce pollution in Indonesia's capital, Jakarta, and “make the sky blue again.”
Both Barito Renewables Energy and PGE anticipate business expansion as Indonesia strives to achieve its net-zero carbon emissions goal by 2060. This endeavor involves accelerating the adoption of renewable energy sources while phasing out coal-fired power plants, which currently dominate the country's electricity generation.
Geothermal energy, in particular, offers a consistent and stable supply of electricity, distinguishing it from intermittent sources like solar and wind power. Indonesia possesses an estimated 27.8 gigawatts of geothermal resources, ranking second globally behind the United States. However, the country's installed geothermal capacity stood at just 2.3 gigawatts in the previous year.
Barito Renewables Energy's IPO proceeds, as outlined in its prospectus, are earmarked for its wholly owned subsidiary, Star Energy, which directly operates the three West Java power plants. This allocation includes the payment of $127.8 million toward Star Energy's outstanding bank loans.
Looking ahead, Barito Renewables Energy has ambitious plans, including increasing the installed capacity of its Wayang Windu plant by 23 megawatts to reach 253.5 megawatts by 2025. Additionally, the company is eyeing further expansions across all three geothermal plants, identifying over 300 megawatts of additional potential capacity.
The parent company of the geothermal operator, controlled by Indonesian billionaire Prajogo Pangestu, also holds interests in Chandra Asri Petrochemical, the country's largest petrochemical group, and Indo Raya Tenaga, which is in the process of constructing a 2-gigawatt coal-fired power plant in Banten province.
