The UAE sovereign-backed green energy group Masdar and Indonesia’s sovereign wealth fund the Indonesia Investment Authority (INA) were leading participants in the IPO of Pertamina Geothermal Energy (PGE), one of the world's biggest geothermal energy producers.

The floating of a 25% stake in PGE on Friday raised IDR9,056 billion (US$595 million), making it the world’s third biggest IPO so far this year. By the end of trading on Monday the stock was down 3.5% from the initial price of IDR860. The Indonesian market has endured a volatile period with home-grown digital companies such as GoTo and Bukalapak seeing their valuations slashed 70% by end-2022. Yet, new listing activity on the Indonesia Stock Exchange was still reasonably healthy in 2022, albeit lagging from the previous year.

Indonesia hosts the world’s second-largest geothermal market, which promises to help expand low-carbon energy in the high-growth Southeast Asian economy. Indonesia has a goal of increasing its installed geothermal capacity from 2.8GW in 2022 to 6.2GW by 2030.

PGE’s portfolio is currently 1.87GW and it aims to develop 600MW of additional geothermal capacity over the next five years. Mohamed Jameel Al Ramahi, Chief Executive Officer of Masdar, said, "Masdar's strategic investment in PGE will complement our already strong footprint in Indonesia, the world's second largest geothermal market. We are especially excited to add geothermal energy to our clean energy portfolio, a clean energy source that can deliver dispatchable power 24 hours a day, which further underscores our position as a global leader in delivering clean energy solutions that help drive the global energy transition."

Masdar’s other projects in Indonesia include the development of the region's largest floating solar facility, the 145MW Cirata Floating Solar PV Plant in Indonesia, and it is assessing 1.2GW of solar capacity in Indonesia for export to Singapore.

Abu Dhabi merged its renewables assets under Masdar in December 2021. Masdar was originally established by sovereign wealth fund Mubadala. Both the oil company ADNOC and ADQ-owned utilities company TAQA exchanged their renewable assets in return for equity in Masdar’s enlarged renewables business, with ADNOC securing a 24% stake, Masdar founder Mubadala reduced to 33%, and TAQA holding the remaining 43%. By 2022, Masdar had a portfolio of 23GW and plans to reach 100GW by 2030.

The INA was launched in February 2021 as one of a new breed of “catalytic funds”, established with the aim of attracting foreign capital into the country. Under the so-called Just Energy Transition Partnership, several governments of developed economies have pledged to provide Indonesia with US$ 20 billion of funding for its green transition to raise the share of renewable energy in Indonesia’s power mix from 11% in 2021 to 34% by the end of the decade.

Image source: Pertamina Global Energy

Related funds INA Mubadala