Adhi Karya makes strong stock market debut

The Jakarta Post, Jakarta

Shares of state-owned construction company PT Adhi Karya made an impressive listing debut on Thursday on the Jakarta Stock Exchange (JSX), surging 23 percent to Rp 185 per share from its initial public offering (IPO) price of Rp 150.

Analysts said the surge was mainly driven by optimistic prospects in the country's construction industry, which is expected to boom after the general election due to high demand for property and massive development of government infrastructure projects.

Last week, Adhi Karya offered 441 million shares, or 24.5 percent of its shares, via an IPO scheme underwritten by PT Ciptadana Sekuritas. The IPO was oversubscribed by 150 percent.

The government is expected to rake in around Rp 66.2 billion (US$7.78 million) from the IPO proceeds.

Aside from selling Adhi Karya shares to the public, the government has also wrapped up selling 24.5 percent of the company's shares to its employees via an employee management buy out (EMBO) scheme.

However, the government will not collect any proceeds from the EMBO, which is estimated to reach Rp 66.2 billion. Instead, the proceeds will be channeled into the company's working capital.

The government now has 51 percent shares in the company.

Adhi Karya, which was established by the government in 1960 to construct public infrastructure, currently has 11 branch offices, three subsidiaries and four joint ventures.

The government is planning to privatize 13 other state-owned companies this year -- including airline company PT Merpati -- in a bid to raise around Rp 5 trillion to help cover the 2004 state budget deficit, as well as increase economic efficiency.