IPO Of Indonesia’s Biggest Cinema Chain Mints A New Billionaire

Aug 08, 2023

Benny Suherman (sixth from the left) pressing the opening bell during the listing of PT Nusantara Sejahtera Raya on Wednesday, Aug. 2, 2023.

Indonesia’s largest movie theater chain, known as Cinema XXI, got successfully listed on the Indonesia Stock Exchange on Wednesday with its shares closing 17% higher at 316 rupiah ($0.02). The IPO propelled cinema magnate Benny Suherman, the company’s cofounder and major shareholder, into the billionaire ranks with an estimated net worth of about $1.1 billion.

Shares of PT Nusantara Sejahtera Raya, the chain’s owner, were priced at 270 rupiah and the IPO was oversubscribed 25 times. The 10% stake that was offered raised 2.2 trillion rupiah ($145 million), valuing Cinema XXI at 22.5 trillion rupiah ($1.5 billion).

Suherman, who has a 54% stake through his holding company Harkatjaya Bumipersada, partly cashed out in the IPO by selling some shares to GIC, Singapore’s sovereign wealth fund, as per an earlier agreement. (His business partner, Harris Lasmana, did likewise and holds 13.5%.) In April, Suherman stepped down as chairman, ceding the spot to his son Suryo. (His other son, Arif, has a board seat and his son-in-law Hans Gunadi is president director.)

Regarded as a pioneer of the movie distribution business in Indonesia, Suherman cofounded the company, then called Subentra Nusantara, with Lasmana and former president Suharto’s late cousin Sudwikatmono in 1988. The company had a near-monopoly over the distribution rights of Hollywood films for years. Sudwikatmono sold his shares to Suherman and Lasmana in the late 1990s after the Asian financial crisis and Suharto’s resignation.

Following the government’s decision in 2016 to open the sector to foreign investors, GIC agreed to invest in Cinema XXI. The strategic partnership, as it was called at the time, gave GIC a call option to buy a 22.5% stake in the theater chain when it went public. During the IPO, GIC exercised that option at the IPO price, acquiring the agreed stake for $334 million.

Cinema XII, which owns almost 60% of the theaters in Indonesia, has earmarked close to two-thirds of the IPO funds to expand its theater network. It has 225 theaters with 1,216 screens—more than four of its rivals combined—and plans to invest $40 million to add another 80 screens this year. Competitors include the Cinemaxx chain, founded by Brian Riady, the grandson of billionaire, Mochtar Riady. In 2019, Cinemaxx was rebranded as Cinépolis Indonesia after Mexican cinema chain Cinépolis acquired a 40% stake for $110 million.

The pandemic took its toll on Cinema XXI when theaters were shuttered during the lockdown and it made a net loss of 351 billion rupiah in 2021. But it swung back into the black in 2022 with a 460 billion rupiah net profit, once restrictions were lifted and people came flocking back to movie halls. While revenue in 2022 jumped to 4.4 trillion rupiah from 1.2 trillion rupiah the year before, that was still short of the company’s highest annual revenue—6.89 trillion rupiah—in 2019.

The company expects the cinema industry to surpass the pre-pandemic level by next year and the overall market to expand to 20.6 trillion rupiah by 2027. According to the Association of Indonesian Cinema Managers (GPBSI), the country has a total of 2,100 cinema screens (as of last year) and there’s scope to expand to 15,000 screens.

Suherman is not the first to become wealthy from Indonesia’s vibrant movie industry. Among the country’s richest is Manoj Punjabi, cofounder of listed film studio MD Pictures, who has a net worth of $1.7 billion.

— With assistance by Gloria Haraito