IBRA wants 'fair' price for BCA public offering<\/p>\n
By Reiner S.<\/p>\n
SINGAPORE (JP): The Indonesian Bank Restructuring Agency
\n(IBRA) wants to set a \"fair\" price for the landmark initial
\npublic offering of Bank Central Asia (BCA).<\/p>\n
The are doing so in order to help maintain a positive momentum
\nfor the country's future IPO or privatization programs, according
\nto agency deputy chairman Jerry Ng.<\/p>\n
Jerry said on Friday that in addition to raising cash to help
\nfinance the state budget, IBRA wanted to ensure the success of
\nthe BCA IPO and to make sure investors buying into the IPO would
\nnot be disappointed.<\/p>\n
\"We want the BCA IPO to build up a momentum for future
\nIndonesian IPOs ... But it is also important not to cause a loss
\nfor investors which will only create a bad image,\" he told
\nreporters following a gathering with potential investors during
\nthe second round of an overseas road show.<\/p>\n
But Jerry declined to confirm whether the final IPO price
\nwould be kept within the indicative price target of Rp 1,350 to
\nRp 1,750 per share or beyond that price range.<\/p>\n
\"It's too early to say,\" he remarked.<\/p>\n
Meanwhile, Jos Parengkuan of the state-owned PT Danareksa
\nSecurities, one of the leading underwriters of the IPO, said that
\nthe final IPO price should not be set beyond the indicative price
\nrange to ensure potential gain to investors once the bank shares
\nwere listed in the secondary market.<\/p>\n
He conceded that the success in the BCA IPO would help revive
\ninvestors' confidence in the country's crisis-ravaged economy.<\/p>\n
IBRA plans to offer between 15 to 30 percent of BCA shares
\nthrough IPO sometime in the middle of next month to raise cash to
\nhelp finance the 2000 state budget.<\/p>\n
A domestic road show had just been completed last week.
\nOverseas road shows started with Hong Kong on Wednesday, followed
\nby Singapore on Friday.<\/p>\n
The next stop will be the U.S. including New York, Boston, and
\nWashington D.C., and finally Europe including London, Edinburgh,
\nand Amsterdam.<\/p>\n
Jerry claimed that so far the response in Hong Kong and
\nSingapore was very positive.<\/p>\n
\"This is a good sign,\" he said, pointing out that by showing
\nup at luncheons and one-on-one meetings held during the road
\nshows was an indication that investors were seriously considering
\ninvesting in BCA.<\/p>\n
Jerry declined to say whether the great enthusiasm would
\nprompt IBRA to sell the BCA shares at the upper 30 percent limit,
\nalthough he admitted that judging by the current enthusiasm there
\nshould be no problem for IBRA to sell 30 percent shares in BCA.<\/p>\n
But Jerry stressed that it's important to maintain a conducive
\ndomestic political environment to ensure the full success of the
\nBCA IPO.<\/p>\n
He admitted that some investors expressed their concern over
\nthe domestic political situation, but many long-term investors
\nwere convinced that Indonesia was moving in the right direction.<\/p>\n
IBRA controls around 92 percent of BCA since the government
\nnationalized the bank in May 1998 following a massive run on the
\nbank's deposit in the wake of the downfall of former president
\nSoeharto.<\/p>\n
The remaining 7 percent is owned by the Salim Group, the
\nfounder of BCA.<\/p>\n
Some of the bigger potential investors met by IBRA during the
\nSingapore and Hong Kong road shows were Invesco, Schroders, HSBC,
\nDresdner RCM, Fidelity, ADIA, SSB-Citi, Deutsche Asset
\nManagement, Jardine Fleming, JP Morgan, Morgan Stanley, Indocam,
\nand Government of Singapore Investment Corp. (GSIC).<\/p>\n
\"Many strategic investors have expressed interest in buying
\nBCA shares,\" Jerry said.<\/p>\n
Asked about the specific plans to be made by the GSIC, Jerry
\nsaid: \"They want to become a catalyst (for Indonesia's economic
\nrecovery).\"<\/p>\n
GSIC has expressed its intention to buy several of IBRA's
\nassets.<\/p>\n
Last month, the company partly purchased the shares of giant
\nautomotive PT Astra International which were divested by IBRA.<\/p>\n
BCA was one of the country's largest private banks before the
\ngovernment nationalized it.<\/p>\n
The bank booked a net profit of around Rp 641 billion (US$80
\nmillion) in 1999 compared to a loss of more than Rp 28 trillion
\nin 1998.<\/p>\n
BCA president Johan Emir Setijoso said that first quarter 2000
\nnet profit was Rp 370 billion.<\/p>",
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