Asia Color Company Ltd, controlled by CVC Capital Partners, has on February 25, 2015 sold 116.7 million shares in PT Matahari Department Stores (LPPF) Tbk, reducing further its ownership in the retail company to 2%. This marks an end of almost five year of investment by CVC Capital Partners in LPPF. Next?<\/p>\n

LPPF and Asia Color didn’t disclose details of the transaction, including pricing. On February 25, LPPF shares ended at Rp17,000. At that price, Asia Color should have grabbed Rp1.98 trillion<\/strong>.<\/p>\n

A month earlier, January 23rd, Asia Color, a JV between CVC Capital Partners and GIC Holdings, sold 8% shares of LPPF to undisclosed buyers at Rp15,400 per share to raise Rp3.67 trillion.<\/strong><\/p>\n

Interesting that LPPF rallied from Rp14850 on February 5th to Rp17000 on Feb 25 or a gain of 14.5%. The stock also rallied by 8.5% in January prior to January 23rd placement.<\/p>\n

Once again, every time Asia Color about to sell its shares, LPPF rallied about two weeks prior to the transaction. Every time, we’re ‘surprised’ with willingness of buyers to pay more.<\/p>\n

<\/p>\n

Meadow Asia (a JV between CVC and Matahari Putra Prima\/MPPA\u2014-Lippo Group with 80% and 20% shares each) acquired 98% shares of Matahari Dept Stores in early 2010 from Matahari Putra Prima (MPPA) for US$790 million or Rp2705 per share<\/b>. PT Matahari Pacific, subsidiary of MPPA, held indirect 19.63% shares in LPPF after the transaction.<\/p>\n

On March 3rd, 2013, Asia Color Company Ltd sold 726.56 million LPPF shares (24.9%) to Multipolar for Rp1216 per share. Days later, as you know, CVC and Multipolar sold 1.167 billion LPPF shares at Rp10850<\/i><\/b> per share to raise Rp12.66 trillion<\/b> (US$1.3 billion). Multipolar\u2019s portion in the placement was 129 million shares (Rp1.4 trillion), resulting in gain of Rp1.24 trillion, because Multipolar received the transfer of LPPF shares from MPPA\u2019s unit.<\/p>\n

On March 3rd, 2014, Asia Color divested 6.51% (190 million shares at Rp13100<\/i><\/b> per share to raise Rp2.49 trillion<\/b>), followed with 11.48% placement on August 7th, 2014 (337.72 million shares at Rp14025<\/i><\/b> per share to raise Rp4.73 trillion<\/b>) to cut further its ownership in LPPF to 14.18%.<\/p>\n

So, in total, investors have paid Rp25.5 trillion for 70% shares in LPPF<\/strong> in the past two years. Lippo Group’s Multipolar remains the single largest shareholder with 20.48% shares as of today. At today’s price, value of LPPF is Rp53.04 trillion, implying to Rp10.86 trillion worth of Multipolar shares in LPPF.<\/p>\n

Lippo sold 80% shares of LPPF to CVC and Lippo for US$619 million, but after five years of manoeuvres keeping 20.48% shares in LPPF worth US$835 million. CVC, meanwhile, bags US$2 billion<\/strong> of profit.<\/p>\n

Lippo sends this popular warning: Don’t try this at home!<\/em><\/p>\n

It is difficult to understand or compare LPPF’s valuation with other retailers like Ramayana (RALS), Mitra Adiperkasa (MAPI), or Hero Supermarket (HERO). Ramayana, for example, generated net profit of Rp340 billion in nine months of 2014 (annualised at Rp453 billion or less than one-third of LPPF). Ramayana posted net profit margin (NPM) of 7.3%, less than one-third of LPPF. We all know, however, Ramayana only has market cap of Rp5.36 trillion today, one-tenth of Matahari Dept Stores.<\/p>\n

Hero Supermarket generated gross profit of Rp3.12 trillion last year or 62% of LPPF’s, but we all know HERO’s market value is only Rp7.74 trillion or about 15% of LPPF’s value.<\/p>\n

With 131 stores nationwide, one Matahari Dept Store outlet is now valued Rp405 billion. Last year, one store generated net profit of Rp10.8 billion, implying to around 2.5% of return on investment (ROI). Placing Rp405 billion in time deposits would generate Rp32 billion per annum.<\/p>\n

The question, of course, how much more investor would willing to pay for LPPF shares without somebody continue cooking up for divestments?<\/p>\n

DISCLAIMER: NO POSITION IN STOCKS MENTIONED IN THIS ARTICLE<\/p>\n","protected":false},"excerpt":{"rendered":"

Asia Color Company Ltd, controlled by CVC Capital Partners, has on February 25, 2015 sold 116.7 million shares in PT Matahari Department Stores (LPPF) Tbk, reducing further its ownership in the retail company to 2%. This marks an end of almost five year of investment by CVC Capital Partners in LPPF. Next?<\/p>\n","protected":false},"author":311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":""},"categories":[5,7],"tags":[],"_links":{"self":[{"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/posts\/16585"}],"collection":[{"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/users\/311"}],"replies":[{"embeddable":true,"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/comments?post=16585"}],"version-history":[{"count":10,"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/posts\/16585\/revisions"}],"predecessor-version":[{"id":16646,"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/posts\/16585\/revisions\/16646"}],"wp:attachment":[{"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/media?parent=16585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/categories?post=16585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/yosefardi.com\/wp-json\/wp\/v2\/tags?post=16585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}