May 8, 2014 7:00 pm JST

Launching investment kick, Indonesia's Medco Power plots $200M IPO

WATARU SUZUKI, Nikkei staff writer

JAKARTA -- Indonesian electricity producer Medco Power aims to go public by mid-2015, raising cash to help fund over $1 billion in projects planned for the next four years.

     The company hopes to rake in $200 million from the initial public offering. Fazil Alfitri, Medco Power's president director, on Wednesday said the plan is to sell a 25% slice to the public at the end of this year or by the middle of next year. He did not say whether parent company Medco Energi International, which owns 49%, or investment company Saratoga Investama Sedaya, which holds 12%, will divest their shares.

     Through 2017, Medco Power intends to invest $1.3 billion in nine plants, Alfitri said. This includes a joint venture with Japan's Itochu and Kyushu Electric Power, centered on building a trio of 110 megawatt generation units in Sumatra. The project, which will result in the country's biggest geothermal power station, is scheduled for completion by the end of 2017.

     Medco Power also plans to build two gas-fired plants in Central Java, five small hydro plants in West Java, and another geothermal plant in East Java.

     Once all nine projects come onstream, Alfitri said, the company's total output capacity will rise from the current 200MW to 1,000MW.

     "We expect revenue to reach $350 million in 2018," Alfitri added. Last year, Medco Power posted revenue of 968 billion rupiah ($87 million).

     Medco Power is one of several companies gearing up investment to meet Indonesia's surging demand for electricity. Saratoga, which has two small steam-fired power plants in North Sulawesi, is looking to add capacity. Coal producer Adaro Energy is planning to build Southeast Asia's biggest coal-fired power plant in Batang, Central Java.