JSMR just signed a Sales Purchase Agreement (SPA) for PT Jasamarga Transjawa Tol (JTT) on Friday, September 27th.
The story behind the formation of JTT as a sub-holding for the Transjawa toll roads is quite fascinating!
Jasa Marga spun off 4 toll road operational segments and 9 equity stakes in Transjawa toll road sections into JTT.
Why did they do it?
Because JTT was created to focus on managing strategic toll roads that are highly attractive to investors.
JTT is like the ‘golden child’ of Jasa Marga’s Transjawa portfolio, equipped with everything you could ask for—strategic locations, a large market share, fully operational toll road assets, and most importantly: steadily growing dividends!
With a long toll road concession period, JTT has the potential to deliver profits for the long haul.
And even though it’s now a subsidiary, JTT remains under Jasa Marga’s control as the ‘Industry Leader’ in Indonesia’s toll road business.
In other words, they still set the pace of the game.
This agreement marks a strategic move by Jasa Marga to divest part of its assets managing the highly popular Trans-Java toll road segments.
Think of this equity financing process like going through a rigorous selection of potential in-laws—it involves three major stages that are no joke.
First, there's the non-binding offer stage, where interested investors can submit initial proposals that are still up for negotiation.
Then comes the binding offer stage, where shortlisted candidates enter a more serious selection process, and Jasa Marga conducts in-depth due diligence to assess financial, operational, and risk aspects.
Finally, Jasa Marga picks its preferred bidder, and the finalization process begins, which includes contract signing and fulfillment of agreed terms and conditions.
What’s interesting is that the buyer in this transaction isn’t a newcomer in the toll road industry.
The buying consortium consists of PT Metro Pacific Tollways Indonesia Services (MPTIS), Warrington Investment Pte. Ltd., and PT Margautama Nusantara (MUN).
It's worth noting that MPTIS and MUN are subsidiaries of the Salim Group, one of Indonesia’s largest conglomerates.
Salim’s involvement in this consortium clearly reflects their serious intention to expand their investment portfolio in toll road infrastructure.
Now, the proceeds from this transaction won’t just be sitting idle in Jasa Marga’s bank account!
A whopping IDR 12.82 tn from the sale of existing shares will be immediately used to reduce debt at the parent level.
This way, Jasa Marga can finally breathe a little easier as their gearing ratio becomes healthier.
This move also gives Jasa Marga more flexibility to take on new debt if they need fresh capital for future toll road projects.
Additionally, JTT secured around IDR 2.5 tn from a new share issuance. This fund was used to buy back equity participation units in RDPT MIET and KIK-Dinfra.
The buyback process actually started back in 2023 with a value of IDR 1.8 tn, and is expected to be completed in 2024 with an additional IDR 0.7 tn funded through a short-term bridging loan.
The payment for JTT’s new share issuance was settled in full at the transaction closing. Meanwhile, the payment for Jasa Marga’s partial divestment in JTT will be done in two stages.
No need to worry about the payment—it’s secured with a Standby Letter of Credit (SBLC) issued by MPTIS and Warrington, as agreed in the preliminary agreement.
Going forward, the proceeds from this transaction will be directly allocated to fund five toll road projects already in the pipeline.
Speaking of new toll projects, Jasa Marga is currently accelerating the development of five major projects: Japek 2, Jogja-Bawen, Jogja-Solo, Probolinggo-Banyuwangi, and access to Patimban Port.
So far, the progress varies across these projects.
With this partnership, we see a positive outlook for JSMR and maintain our BUY recommendation with a target price of IDR 6,600.
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