Jasa Marga to raise Rp 3 trillion from infrastructure fund, securities

Posted by on 07 November 2019


State-owned toll road operator PT Jasa Marga plans to raise up to Rp 3 trillion (US$214 million) through the issuance of two capital market instruments to finance its infrastructure projects in the country.

Corporate finance group head Eka Setya Adrianto said in Jakarta that the two instruments – a collective investment contract called infrastructure fund (DINFRA) and sharia-compliant asset-backed securities (EBAS) – would be issued before the end of the year.

The company expects to raise between Rp 500 billion and Rp 1 trillion from the DINFRA and another Rp 2 trillion from the issuance of the EBAS. The funds would be partly used to finance its turnkey toll road projects worth about Rp 20 trillion, which are expected to be completed next year.

"We'll use one of the trans-Java toll road concessions as the underlying asset for the DINFRA," he explained during a media briefing in Jakarta on Tuesday.

It will be Jasa Marga’s second infrastructure fund after the Rp 423.5 billion DINFRA launched in May that used the Gempol-Pandaan toll road concession, part of the 1,167-kilometer trans-Java toll road, as its underlying asset. That DINFRA was the country's first-ever infrastructure fund to be issued in the market and listed on the Indonesia Stock Exchange (IDX).

A DINFRA is used to pool funds to be invested in infrastructure assets in the form of debt or equity by investment managers.

As for the EBAS, Eka continued, the company planned to use the Jakarta Outer Ring Road (JORR) as the underlying asset.

Donny Arsal, Jasa Marga finance director, added that the EBAS issuance would mark the first sharia-compliant collective investment instrument for the company following a fatwa from the National Sharia Board of the Indonesian Ulema Council (DSN MUI) late last year. 

"The EBAS is currently in the rating process, and we're working to get permission from the Financial Services Authority [OJK]," he said.

Like with conventional asset-backed securities, EBAS portfolios consist of financial assets. Investors that put their money in the securities are entitled to receive a portion of the company's cash flow as a return of investment. In Jasa Marga's case, the returns will be sourced from the toll fees.

Although he acknowledged that the OJK process would take a long time, Eka said he hoped the EBAS could be issued in the fourth quarter of this year, along with the company's second DINFRA.

Aside from planning to issue collective investment instruments, Donny said the company was mulling to issue step-up bonds and zero-coupon bonds in the near future.

A step-up bond is a bond that pays a lower initial interest rate but includes a feature that allows for rate increases at periodic intervals.

Meanwhile, a zero-coupon bond is a bond that is issued at a deep discount to its face value but pays no interest. Although investors will not receive interest, they will receive a gain at maturity as the bond will be redeemed at its face value.

Donny, however, was not able to give a specific timeline for issuance of the step-up and zero-coupon bonds. “We have yet to find the right pricing for these instruments, because our pricing doesn’t match the figure investors want,” he said.

Jasa Marga has used several alternative financing schemes in a bid to fund a number of its toll road projects in the country.

In August 2017, the company became the first-ever in Indonesia to securitize a toll road, namely the Jakarta-Bogor-Ciawi (Jagorawi) concession that connects Jakarta and Puncak in West Java, through a conventional EBA.

It was also the first Indonesian company to issue rupiah-denominated global bonds, or Komodo bonds, to collect Rp 4 trillion in late 2017.



The company’s toll and other operating revenues increased by 11.6 percent year-on-year (yoy) to Rp 7.96 trillion during the January to September period of this year.

However, the company’s total revenues fell by 22.76 percent to Rp 21.15 trillion as  of the third quarter of this year.

Despite the decline, Jasa Marga’s earnings before interest, tax, depreciation and amortization (EBITDA) recorded a 16.9-percent yoy increase to Rp 5 trillion during the period. But its profit dropped by 15.18 percent yoy to Rp 1.5 trillion in the first nine months of this year.

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