10 major investors bid for BCA shares

JAKARTA (JP): More than 10 local and foreign institutional investors have submitted bids for Bank Central Asia (BCA) shares, a senior official of the Indonesian Bank Restructuring Agency (IBRA) said here on Tuesday.

IBRA's deputy chairwoman, Felia Salim, said the agency planned to sell between 20 percent and 30 percent of BCA shares to a strategic investor.

"We plan to sell around 20 percent to 30 percent through private placement," she said when asked whether the agency had changed its selling strategy.

Felia said that the agency would abide with the House's stipulation that the government sell the 40 percent of BCA through a combination of a strategic sale and secondary offering.

Speaking to reporters on the sidelines of a hearing with House Commission IX on the state budget and finance, she said the non- binding tender process, which started last week, would be closed at the end of this month.

"We expect to complete the divestment program by the end of June or early July," she added.

BCA plans to launch its secondary public offering as part of the government's divestment program in the bank early July.

Asked if the agency would consider selling more than 30 percent of BCA's shares via direct placement, she said: "We can't decide yet because we're still studying the appetite of the investors."

Felia refused to explain the details.

Selling the government's 40 percent stake in BCA through a private placement will provide the government with a premium price, but analysts have said that a strategic investor would only agree to pay the premium if they could obtain a large block of shares.

But legislators have said that selling the shares via a private placement mechanism would lack transparency. There has been strong pressure from legislators to bar the former BCA owner, the Salim Group, from buying back into the bank.

Separately, legislator Theo Toemion of the House of Representatives' Commission IX, said that the International Monetary Fund (IMF) had demanded the government sell 39 percent of its stake in BCA to strategic investors.

The IMF's Asia Pacific deputy director Anoop Singh had demanded that 39 percent of the 40 percent stake which the government planned to divest from BCA be sold to strategic investors and the other 1 percent to the public.

Theo said he met Singh late last month when he was leading a visiting IMF team to review progress in Indonesia's economic reform program.

"It seems there is the worry that a secondary public offering will not be successful," Theo said after attending an investment seminar organized by Bank Commonwealth (the Indonesian operation of Australia's Commonwealth Bank).

The proceeds from the selling of BCA shares on the stock market, he said, might not reflect the bank's real value given the present unfavorable market conditions. However, Theo said he preferred a secondary offering as it would ensure the bank remained under Indonesian control.

BCA's divestment, along with that of Bank Niaga, was slated for last year. Legislators blocked the sales on fears that they were untimely given the then sluggish market.

The move, however, prompted the IMF to later delay indefinitely the disbursement of the next tranche of a US$400 million loan to the country. The IMF has promised Indonesia a $5 billion loan package under a three-year economic reform package. (rei/bkm)