JAKARTA (rambuenergy.com) – State owned energy company PT Pertamina said it is mulling a plan to sell shares of three subsidiaries that are not directly engaging in oil and gas business through initial public offering (IPO) on the Indonesian Stock Exchange (IDX).
The three companies are insurance firm PT Tugu Pratama Indonesia, hotel chain operator PT Patra Jasa and its hospital subsidiary PT Pertamina Bina Media, with an aim to improve their performance.
“We are still studying it (IPO). Tugu Pratama, Patra Jasa and RS Pertamina are being considered for IPO,” Pertamina President Director said on the sideline of media briefing at the office of State Enterprise Ministry late Tuesday (Jan. 19).
He said the financial reports of those companies are being audited. He expects to make decision in February, which of these companies that will be listed on the Indonesian Stock Exchange (IDX) first.
Dwi has said earlier that the subsidiaries that will be prioritized to float shares are subsidiaries that are not directly related with oil and gas business. Pertamina currently owns seven out of 18 subsidiries that are operating in non-oil and gas sectors.
Tugu Pratama is a strong candidate for the IPO. Pertamina controls 65 percent shares of Tugu Pratama, one of the largest general insurance company in Indonesia. In February last year, Fitch Ratings Indonesia affirmed Tugu Pratama’s National Insurer Financial Strength (IFS) Rating at ‘AA(idn)’ with “Stable” outlook.
The ‘AA’ National IFS Ratings denote a very strong capacity to meet policyholder obligations relative to all other obligations or issuers in the same country, across all industries and obligation types. The risk of ceased or interrupted payments differs only slightly from the country’s highest rated obligations or issuers, Fitch said.
Tugu Pratama has also taken steps to diversify its business, with energy risks accounting for around 42.25 percent of its premium income at end-2014, down from 51 percent at end-2013. Maintenance of a more balanced portfolio would translate into lower volatility in the company’s underwriting results and enhanced premium sustainability.
“The rating reflects Tugu Pratama’s strong market presence in the Indonesian non-life insurance market and capital support, if needed, from its 65 percent shareholder, PT Pertamina (Persero) (BBB-/Stable), a major state-owned oil and gas company,” Fitch said.
It also considers the company’s sound operating profitability and maintenance of healthy capitalisation. Tugu Pratama’s premium sustainability and business portfolio continue to be vulnerable to its exposure to large corporate and oil and energy insurance risks. (*)