Angkasa Pura prefers privatization via IPO

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.