Jakarta. Property developer Forza Land Indonesia has reduced the price of its initial public offering by 40 percent amid subdued investor interest.
Forza Land will now sell 312 million shares, or the equivalent to 20 percent of its enlarged capital, at Rp 220 a piece, seeking to raise Rp 68.75 billion ($5.2 million) to fund the acquisition and paying debts, according to a prospectus published on Thursday (20/04).
The company delayed the IPO in December when it sought to raise up to Rp 109 billion by offering the shares at between Rp 300 and Rp 350 apiece.
Binaartha Sekuritas analyst Reza Priyambada said considering the company's relatively small size and relatively high offering price, investors believe the shares would not have adequate liquidity to be traded on the market.
"There could not be as much demand as the company initially predicted," Reza said. He added that it would force the company to slash the offering price.
To attract investors, Forza Land also offers warrants, which entitle the holders of five shares in the company to buy seven more shares at Rp 275 apiece over the next three year. Forza Land has earmarked 35 percent of this enlarged capital for the warrant program.
Sinarmas Sekuritas will be the underwriter of the IPO.
The company would use 58.18 percent, or Rp 40 billion of the IPO proceeds to acquire 99 percent equity in property company Borneo Sarana Properti.
At least 19.4 percent of the proceeds will be allocated towards the repayment of debt to Chitta Kriya Laksana, while at least 8.11 percent will also go towards repaying debt to Pratama Maju Jaya.
The remainder of the proceeds will be used as working capital, such as buying materials and machinery.
The offering period is scheduled for April 20-21, with the shares being listed on the Indonesian Stock Exchange (IDX) on April 28.
The company's projects include One Casablanca apartments in South Jakarta and One Azure and One Velvel in Serpong, Banten.