Harita Nickel raises $660mn in Indonesia’s biggest IPO this year

Harita Nickel has raised Rp10tn ($660mn) from investors including Swiss commodities trader Glencore and Asian sovereign wealth funds in Indonesia’s largest initial public offering so far this year, in the latest deal to underline Jakarta’s red-hot market for public listings.

Harita Nickel, known as Trimegah Bangun Persada locally, is one of a handful of major commodities leading a record IPO pipeline this year in south-east Asia’s biggest economy. The company priced shares at Rp1,250, at the top end of its range, valuing it at $5.15bn. 

Indonesia holds the world’s largest nickel reserves, a vital metal for electric vehicles and energy storage, and the IPOs serve as a major test of international investor confidence in the country’s attempt to develop an end-to-end electric vehicle supply chain.

Harita’s share offering — the retail portion of which will follow in early April — was oversubscribed despite softening nickel prices, a global scandal over alleged missing nickel and the volatility in financial markets following Credit Suisse’s demise and Silicon Valley Bank’s collapse.

Harita’s IPO also comes at a time when there is increased scrutiny on the level of Chinese dominance of Indonesia’s nickel supply chain. Chinese companies own or have major stakes in most of the country’s mines and Harita’s partner is China’s Lygend Resources.

“We were nervous given the timing but a number of long-only and quality investors came in,” said one investment banker familiar with the deal.

In addition to Glencore and regional sovereign wealth funds, the bookbuild included a number of international funds, including Fidelity, two people familiar with the situation said. There were “very few” hedge funds, they added.

Harita Nickel declined to comment.

Indonesia was already the second biggest IPO market in Asia this year, buoyed by commodities companies and belying lacklustre listings in many developed markets. Harita’s offering surpassed Pertamina Geothermal Energy, which raised $597mn 

Merdeka Battery Minerals is also set to test the market as soon as next month with a local listing. Amman Mineral International, Indonesia’s second-largest copper and gold miner, is planning an IPO of up to $1bn in the next three months.

Harita, a subsidiary of Indonesian conglomerate Harita Group, operates the country’s first high-pressure acid leaching smelter on Obi island in North Maluku, producing 60,000 tonnes of contained nickel per year.

A second plant next year will boost capacity to 120,000 tonnes. There are questions over the environmental sustainability of the HPAL process used to extract nickel and cobalt from laterite ore. Proponents argue it is the most environmentally friendly smelting process recognised by the industry.

Harita Nickel shares are set to debut in Jakarta on April 12. Credit Suisse Group, BNP Paribas, Citigroup and Mandiri Securities are joint global co-ordinators.