15 investors submit bids for 51% BCA share

Berni K. Moestafa, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) said that 15 investors had submitted preliminary bids for a 51 percent stake in Bank Central Asia (BCA), marking the next step in a tender offering that IBRA was rushing to finalize before the end of the year.

IBRA chairman I Putu Gede Ary Suta said that from the 23 investors that had expressed interest in BCA, 15 had submitted preliminary bids.

"This morning we disclosed the preliminary bids for BCA: they totaled 15," Ary Suta told reporters.

He refused to disclose their identities, but said they were both local and foreign investors.

Reports said earlier that bidders for the BCA stake had included JP Morgan Partners, ABN Amro, Standard Chartered, Bank Negara Indonesia and local securities firms Trimegah Securities and Makindo. The Bank of China had also been rumored to be interested in BCA.

The entry of bids for the BCA stake raises new optimism that the government's key divestment program may be completed this year. No less than Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti said earlier that a sale this year was unlikely due to poor market conditions.

The government is expected to obtain around Rp 5 trillion (US$471.70 million) in proceeds from the sale of the 51 percent stake in BCA, which would be a significant contribution toward the financing of this year's state budget deficit.

The completion of the BCA sale would also help revive investor confidence in the ailing economy, analysts said.

Ary Suta said IBRA would short-list the 15 investors, but there was no telling when the final bidders could be announced.

"The qualities sought in short-listing the bidders include: prime banks or investment firms with a good reputation, solid financial position, transparent funding sources, not being included in the list of people who have been blacklisted by Bank Indonesia, not being directly or indirectly affiliated to the former owners of BCA, and their offer price," IBRA said in a media statement.

It added that short-listed bidders were entitled to carry out due diligence investigations on BCA.

"From the result of the due diligence process, which takes several weeks, strategic investors will submit their final bids," the agency said.

Efforts to find the bank a strategic investor began last year.

Back then, legislators blocked the sale due to unfavorable market conditions. It identified as one of the reasons the fact that the IMF had suspended its loan program for eight months until last August.

Last June, a plan to sell a 31 percent stake in BCA came to nothing due to what was believed to have been low bids.

The government then raised the stake to 51 percent in the hope of luring strategic investors.

Some analysts have said that the current downturn in market sentiment abroad has dampened the appetite of investors for Indonesian assets.

They warned that this situation might result again in low bids.

Chairman of IBRA's oversight committee Mar'ie Muhammad said IBRA had to ensure that only a credible investor would gain entry into BCA.

"We don't want fly-by-night operators, taking their profit then bidding farewell," he told reporters.

Final bidders must undergo a fit and proper test by Bank Indonesia, which will become the final arbiter, filtering out the credible investors from the dubious ones.