IPO KRAKATAU STEEL

PT Krakatau Steel Tbk, one of the strategic state-owned enterprises, initiated its public offering on 10 November 2010. Only several minutes after its opening, the price rocketed to Rp  1,270 from the initial price of Rp 850. This stopped because of the auto-rejection mechanism on the trading floor. The market capitalization reached Rp 20.03 trillion, the biggest capitalization for the IPO company. The initial price reflected severe underpricing; the price on the black market reached Rp 1,500 compared to the official Rp 850.

The allocation of the stocks was also intriguing because it was suspected that the allocation mostly favored foreign instead of domestic investors. A citizen lawsuit was opened to cancel the Krakatau Steel IPO.

This case study highlights the IPO of Krakatau Steel from the capital structure’s point of view, using EPS and EBIT curve.