State-owned PT Perum Pegadaian, the country’s biggest operator of pawn shops, said on Tuesday that it would seek Rp 7 trillion ($756 million) from the capital markets this year to strengthen its capital structure and increase its total lending.
Pegadaian finance director Budiyanto said the company would likely issue Rp 2 trillion in bonds, take out commercial loans totaling Rp 4 trillion and seek Rp 1 trillion from the money market.
Budiyanto added that preparations for the bond issue would begin in March.
“The company needs an additional Rp 7 trillion in fresh capital to strengthen our reserve funds to lend more to the public,” Budiyanto said.
He said the greater financial reserves would enable the company to lend more and generate 55 percent revenue growth this year, to Rp 75.8 trillion from Rp 48.7 trillion in 2009.
Pawn shops are popular in Indonesia, especially during Ramadan, when people across the archipelago offer such items as gold and motorcycles to finance their holiday spending. Pegadaian has about 3,200 outlets nationwide.
Pegadaian issued Rp 1.5 trillion in fixed-rate bonds in 2009.
Budiyanto said the company was in talks with PT Bank Mandiri, PT Bank Rakyat Indonesia, PT Bank Negara Indonesia and PT Bank Central Asia about the commercial loans.
Separately, Pegadaian president director Chandra Gunawan said that about Rp 66 trillion of the company’s estimated Rp 75.8 trillion in projected revenue this year would come from the pawn business.
The remainder would come from the company’s subsidiaries, which include the financing of retail products and safe-deposit box services.
Chandra said the company expected to again accept stocks and bonds as collateral for pawn shop lending, reviving a scheme suspended since 2007.
“We have already asked for permission from the State Enterprises Ministry so we could use the scheme again this year,” he said.
Addressing the company’s intention to go public on the Indonesia Stock Exchange (IDX), Chandra said the listing would have to wait until the government changed the pawn-shop operator’s status from a general company with public-services obligations to a limited for-profit company.