Indorama Ventures Plan to Spinoff IOD and Packaging Businesses in 2025

Indorama Ventures Public Company Limited (SET: IVL) has confirmed its plan to spin off the IOD and packaging businesses, according to the report from Tisco Securities in its research from the Capital Market Day.

The paper stated that at the Capital Market Day, IVL unveiled plans to spin-off 25-30% of its holdings in two assets: 1) IOD integrated downstream arm in the Americas (mainly, surfactants) under the new name ‘Indovinya’, and 2) the packaging business to help reinforce the balance sheet and cash flow.

The size for its IOD and packaging business is expected to be around $750 million and $250 million, respectively.

IVL expected the spinoff for Indovinya to take place in late 2025 or early 2026, while the IPO for its packaging business should be within 2025. Still, there is no indication of which market the two businesses will be listed in.

Moreover, IVL is also planning to divest its non-growth assets, aiming to generate a total of $300 million as part of its strategic plan. The divestment plan includes the Corpus Christi project in the US which was recently impaired.

Tisco Securities stated that it has a neutral view on the spinoff plan. On a positive note, IVL could utilize the proceeds to pay down debts to relax its balance sheet from what would be a prolonged weakness in the PET market.

The brokerage company expected a total of $1,000 million proceeds from the spinoff could lower IVL’s DE from 1.25x to 1.03x and its net debt-to-EBITDA from 4.7x to 3.9x in 2025.

Tisco Securities pointed out that the spinoff could unlock Indovinya’s value as its peers are trading at 2024e EV/EBITDA of 14.3x, compared to 7.7x for IVL.

However, Tisco Securities pointed out that there is a possibility that the market will apply a holding discount to IVL given the dilution to earnings of the more profitable businesses.

In addition, Tisco Securities maintained its “HOLD” recommendation on IVL with a target price at THB27.00 per share.