Danareksa blamed for unfair IPO<\/p>\n
JAKARTA (JP): The initial public offering of the state-owned
\nPT Bank Dagang Negara (BNI) 1946 will be oversubscribed but the
\nlead underwriter may have acted unfairly, according to several
\nstock brokers.<\/p>\n
"We have just experienced poor management of a state firm's
\npublic offering. And it could have a negative impact on future
\nprivatization programs," a senior manager of a joint-venture
\nbrokerage house said.<\/p>\n
"Many investors told us they were very unhappy with the
\noffering process, particularly with the poor distribution system
\nfor forms. They were also doubtful they would get BNI's shares
\nthrough a fair pooling system," the manager added.<\/p>\n
BNI has offered 1.08 billion shares, or 25 percent of its
\nenlarged capital, to the public through a four-day initial public
\noffering which ended last Thursday.<\/p>\n
The BNI shares will be allotted on Nov. 15. Danareksa will
\nrefund investors on Nov. 21 before listing BNI's shares on the
\nJakarta and Surabaya stock exchanges on Nov. 26.<\/p>\n
Fajar L. Sutandi of PT Sigma Batara told The Jakarta Post that
\ninvestors were uneasy about problems in getting subscription
\nforms.<\/p>\n
"We failed to provide subscription forms to our clients who
\nhave sent their money to our office," Fajar said.<\/p>\n
"I have learnt that Danareksa printed only 800,000
\nsubscription forms for BNI's 1.08 billion share offering," he
\nsaid.<\/p>\n
The state-owned Danareksa Sekuritas is acting as the lead
\nunderwriter for the offering which is believed to be the largest
\nissue ever made by a bank in Indonesia.<\/p>\n
An investor told the Post he had canceled his order for
\n2,000,000 shares because his broker only had 5,000 shares.<\/p>\n
Another dealer with a Hong Kong-based brokerage said the
\nunderwriter had violated procedures by selling fixed-allotment
\nshares to individual investors.<\/p>\n
"In this case, I think the market regulator should take firm
\naction," he said.<\/p>\n
"I also learnt that a well-connected businessman subscribed to
\nup to 50 million shares of the fixed allotment category," he
\nsaid.<\/p>\n
"Therefore, I doubt the offering will meet the objective of
\nthe government's privatization program to democratize capital
\nthrough share ownership," he said.<\/p>\n
Fajar said that of all the BNI shares offered, 49 percent were
\nallocated for foreign investors and 51 percent for domestic
\ninvestors.<\/p>\n
About 50 percent of the shares allocated for domestic
\ninvestors were sold to institutional investors, including state-
\nowned pension funds and insurance companies, through fixed
\nallotments, meaning that investors will get the number of shares
\nthat they subscribe to.<\/p>\n
The other 50 percent of domestically-allocated shares were
\nsold via a pooling system. Under the system, in case of
\noversubscription, investors will not get the number of shares
\nthey subscribed to. Instead, the underwriters decide how to
\nprovide a proportionate number of shares as a percentage of
\ninvestors' orders.<\/p>\n
The brokers suggested that in future pooling systems should
\nuse a draw procedure and not a proportional allotment procedure.<\/p>\n
Seventy-nine securities firms are acting as underwriters and
\nsub-underwriters for BNI's initial public offering, while smaller
\nbrokerages are acting as agents.<\/p>\n
Danarkesa, the lead underwriter, is underwriting 386 million
\nshares of the shares, while three co-lead underwriters, PT BNI
\nSecurities, PT Penthasena and PT Bahana Securities, are
\nunderwriting 135 million shares each.<\/p>\n
The 75 sub-underwriters were categorized into seven levels.
\nDanareksa has allocated the number of shares to be underwritten
\nby the sub-underwriters. The numbers range from 25 million shares
\nfor a level-one sub-underwriter to 600,000 shares for a level-
\nseven.<\/p>\n
The level-one sub-underwriters are Credit Lyonnais Capital
\nIndonesia, Merrill Lynch Indonesia, ING Baring, Jardine Fleming
\nIndonesia and Nomura Indonesia.<\/p>\n
Despite the offering's sloppy management, the brokers were
\nconfident the shares would perform well.<\/p>\n
"In the gray market, the stock has increased from Rp 950 to Rp
\n1,000," Goh Poh Heng from Citramas Securities said.<\/p>\n
Goh predicted there would be heavy selling in the secondary
\nmarket when the share price hits Rp 1,200.<\/p>\n
He said that, unlike other state firms such as Telkom and
\nIndosat, BNI was in an industry in which investors had other
\nchoices including cheap shares of large banks.<\/p>\n
BNI's initial public offering, priced at Rp 850 a share, has a
\nprice-earning ratio of eight, which is below the sector's average
\nof ten. (alo)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/danareksa-blamed-for-unfair-ipo-1447893297",
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