Nickel companies are driving a record year for public listings in Indonesia, in a crucial test of investor enthusiasm for President Joko Widodo’s ambition to make the country a top participant in the global electric car market.
Harita Nickel, a subsidiary of Harita Group with a significant project in North Maluku, is holding its investor roadshow this week and hoping to raise at least $600mn ahead of a book build later in March, two people familiar with the talks said.
Merdeka Battery Materials is also planning a local listing in the first half, the people said. Hillcon, a nickel contractor that went public last week on Indonesia’s stock exchange, is trading 25 per cent higher than its initial public offering price.
Indonesia is already the second-busiest IPO market by both deal value and number of listings in Asia this year, after China, according to data from Dealogic. Bankers expect as much as $4bn in issuance in 2023.
The country wants to become a crucial cog in the global supply chain for the fast-growing electric vehicle industry. It holds the world’s largest nickel reserves — a key metal used in batteries — and is the biggest producer of the commodity.
Widodo has banned the export of raw nickel to encourage more battery makers to build domestic factories to process it. Known as downstreaming, the move has helped increase the value of the country’s nickel product exports to nearly $30bn last year, more than ten times what they were a decade ago.
As a result, a full electric vehicle supply chain is emerging. South Korea’s LG Energy Solution is building a $1.1bn battery cell plant while carmaker Hyundai opened its first south-east Asian plant to assemble electric cars last year. China’s CATL has invested in the industry while Tesla and BYD are being courted by the government.
Now the public listings of nickel companies are set to test foreign institutional investor interest in Widodo’s vision, despite Indonesia still being seen as a fragile emerging market with volatile equities.
Siddharth Mathur, head of Asia-Pacific emerging markets research for BNP Paribas, said nickel could help “reduce its external vulnerability structurally and as a result, allow it to deliver higher returns for less volatility”.
“That in turn allows the market to re-rate how it thinks about Indonesia. You could see institutional investor participation in Indonesia’s own market shift meaningfully.”
Jerry Goh, an investment manager on the Asian equities team at abrdn said: “This can be a chance for global investors who like the [nickel] story to invest into it.”
If the companies used money raised to develop downstreaming plans, that would boost their margin profiles, he added. “You’re selling it at a more expensive price . . . this could be very attractive [for investors].”
It is not only nickel producers heading for the market. Amman Mineral International, Indonesia’s second-largest copper and gold miner, is planning an IPO of up to $1bn in the first half, according to a person familiar with its plans. Copper is another essential material in electric vehicles.
The commodities listings, as well as privatisation activity this year in the form of partial listings of state-owned enterprises, indicate a record year for Indonesia’s stock market, said Udhay Furtado, co-head of Asia equity capital markets at Citigroup.
Government-run oil group Pertamina listed its geothermal unit Pertamina Geothermal Energy last month after raising $597mn in one of the world’s biggest IPOs so far this year.
“There are very interesting companies that are looking at going public this year and we expect strong global interest,” Furtado said.