Adaro Energy Indonesia (ADRO) executed a strategic spin-off of its thermal coal subsidiary, Adaro Andalan Indonesia (AADI), marking a significant step towards sustainability and a shift to renewable energy. The transaction was notable for AADI’s attractive valuation of 1.59x PE, significantly below industry peers, and we expect a significant upside from the transaction. ADRO shareholders received exclusive rights to purchase AADI shares, supported by a large dividend distribution to fund the acquisition.

Portfolio Actions

With ADRO already part of our equity portfolios, we increased our position in ADRO to increase the rights to purchase AADI shares. Post AADI’s IPO, we exercised our rights to purchase AADI’s shares given its attractive valuation, strong market potential, and large expected dividend from AADI in 2025.

In anticipation of AADI’s transaction, we strategically reduced exposure to over-performing sectors and reallocated profits to emerging growth opportunities to achieve a balanced risk-adjusted return.

Looking Ahead

AADI’s IPO has significantly enhanced ADRO's shareholder value and positively impacted our equity portfolio performance. We remain confident in AADI’s compelling near-term growth prospects, which are driven by a resilient outlook on thermal coal. 

By participating in ADRO's corporate action, we’re working on our ongoing commitment to enhancing the long-term value of our investments for you, our investors. We remain excited about ADRO and AADI’s development and continue monitoring the opportunities and risks ahead.