Merkado Barkada
January 13, 2025 | 9:18am
Citicore Renewable Energy [CREC 3.49 ?5.8%; 234% avgVol] [link] sold a 20% interest in the company to PT Pertamina Power Indonesia (Pertamina NRE), a subsidiary of Pertamina Power, a state-owned power producer in Indonesia. Under the terms of the deal, CREC will sell ~2.23 billion primary common shares to Pertamina NRE at a price of P3.00/share, to raise approximately p6.7 billion. CREC bills this transaction as the start of a “partnership” that will give it “the opportunity to partner with Pertamina NRE to develop renewable energy projects in Indonesia, allowing for the company’s potential expansion in the region.” For Pertamina NRE, this deal is part of its parent company’s push to invest nearly $6 billion in renewable energy over the next four years.
MB BOTTOM-LINE: This deal is at a 9% discount to CREC’s pre-announcement market price, but the post-announcement surge in buying interest says (for now) that buyers aren’t too concerned. This is the kind of deal that can drive long-term growth, but it’s not an automatic win. From what we know publicly, nothing about this deal guarantees CREC access to the Indonesian market or participation in any of Pertamina NRE’s projects. The tone of the press release certainly paints a collaborative picture, but P6B business deals are not made between friends, they’re made between “interests”. Shareholders should probably be cautiously optimistic about this, but temper that optimism with every month that passes where we don’t hear news about a new project with direct lineage to this deal. At the very least, this is a huge fundraise for CREC. Since these are primary shares, the money will go directly to CREC for use in whatever CREC’s management team sees fit.
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