Harita Nickel’s first-day jump signals big year for Indonesian IPOs

Harita Nickel, Indonesia’s biggest initial public offering this year, jumped on its debut to be valued at more than $5.5bn, putting the south-east Asian country on course to overtake the US IPO market this year in terms of equity fundraising.

Nickel and other energy companies have been a driving force in what is set to be a record year for Jakarta’s market. Shares in Harita Nickel rose more than 4 per cent to Rp1,305 ($0.09) on their debut in Indonesia on Wednesday, bringing the company’s market value to more than Rp82tn.

The successful listing has helped cement Jakarta’s ranking as one of the world’s hottest IPO destinations this year, with the more than $2bn raised so far making it the fourth-most active market globally, according to data from Dealogic.

Harita’s deal will be closely followed by that of Merdeka Battery Minerals on April 18, when it is set to raise as much as $585mn. Pertamina Hulu Energi, the upstream unit of Indonesia’s state energy company Pertamina, kicked off an investor education roadshow at the end of March and is set to raise up to $1bn in the coming weeks, according to two people familiar with the deal.

Indonesia’s equity fundraising haul represents a nearly 70 per cent rise from a year ago and is more than double that of fifth-place Hong Kong’s year-to-date total of about $860mn. The forthcoming listings of Merdeka and Pertamina Hulu Energi would put the country on track to overtake the US market, which has raised $1.4bn more than Indonesia to date.

Harita’s offering surpassed that of Pertamina Geothermal Energy, which raised $597mn in February.

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.

Indonesia’s booming IPO market is also a test of foreign investor enthusiasm for local companies. Jakarta is still regarded as a fragile emerging market with volatile equities, though analysts say that could change this year. Glencore and other international investors that invested in Harita and Merdeka said last week it had seen strong foreign institutional interest.

The nickel industry and companies such as Harita are of particular interest to international investors. President Joko Widodo wants Indonesia 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.

Manishi Raychaudhuri, head of Asia-Pacific equity research at BNP Paribas, said that despite investor concerns over demand, owing to a fall in nickel prices over the past year, “the consensus among experts is if you have a sufficiently long time horizon… no doubt these [EV-related] materials are in a super cycle.”

Many investors still have concerns about the environmental impact of nickel mining. Critics say Indonesian nickel production has wrought significant environmental degradation upon the country’s land and sea.