Angkasa Pura prefers privatization via IPO
The Jakarta Post, Jakarta
The management of state-owned airport operator PT Angkasa Pura II prefers its privatization to be carried out through an initial public offering (IPO) instead of a planned strategic sales mechanism, an official has said.
Angkasa Pura II spokesman Sjahrial Sjam said the IPO could provide the government with greater proceeds.
"In the last meeting, company executives almost concluded that the privatization should be carried out through an IPO, and to initially sell only a 10 percent stake," Sjahrial told The Jakarta Post on Thursday on the sidelines of a state-owned enterprises (SOE) exposition.
He said that through an IPO, the government could test investors' appetite for the company, adding that if the market response was strong, the resulting price could be used as a benchmark for a second round of sales to strategic investors.
But he quickly added that it was fully up to the government to decide on the method of privatization.
The government has been planning to sell its shares in the company to strategic investors during the past two years, but bidding prices offered by the investors were much lower than what the government had expected.
Sjahrial said that the relatively low bids were possibly due to the perceived poor investment climate at home.
Among the foreign strategic investors that have expressed interest to purchase Angkasa Pura II are international airport operators, such as the British Airport Authority and the operator of Amsterdam's Schipol.
The government's privatization program is primarily aimed at raising cash to help finance the state budget deficit. For the next year, the government is targeting to raise about Rp 8 trillion in proceeds, compared to this year's revised target of Rp 3.9 trillion. The initial target was Rp 6.5 trillion.
The government has expected to complete the privatization of Angkasa Pura II in November this year.
Angkasa Pura II operates 10 airports in the western region of Indonesia, including Soekarno-Hatta International Airport.
Sjahrial said, however, that it was important for the government to maintain control of Angkasa Pura II, meaning that the sale of the company's stake should not exceed 49 percent.
He said that the management of Angkasa Pura II would intensify its campaign on the importance of the privatization program among company employees to limit internal resistance.
"We'll inform employees that privatization does not mean layoffs," he said.
Strong resistance from employees is seen as a factor that has caused delays in past privatization programs.
Sjahrial said that overall, the company was ready for privatization.
He said that the company's financial performance had been quite strong, which would make it appealing to investors.
Meanwhile, the privatization of another airport operator, PT Angkasa Pura I, would be delayed indefinitely, as the company was struggling with a bad financial performance.
"Only four out of the 13 airports are profitable," said a source at the company, which operates 14 airports in the eastern and middle parts of Indonesia.