BCA re-tender to start next week

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) expects to start the retender process for a 51 percent stake in Bank Central Asia (BCA) by early next week, according to a senior official at the agency.

IBRA deputy chairwoman for bank restructuring Felia Salim said on Wednesday that by next week IBRA would start sending out bidding invitations.

"Preparations are under way. Hopefully late this week, but most likely early next week we'll send out the bidding invitations," Felia told reporters following a hearing between IBRA and House of Representatives Commission IX for financial affairs.

She said the second tender would follow the same process as the one last March, when IBRA sent offerings to 55 investors.

The "teaser letters", Felia said, would be sent to banks and financial institutions.

"Based on the House's decision, they (the potential investors) must be banks and financial institutions with a good reputation."

"The criteria is clear ... they must have a good reputation and should be capable of increasing BCA's value," she explained.

Earlier, IBRA chairman I Putu Gede Ary Suta said he would sell the 51 percent BCA stake at a premium price of Rp 1,750 a share. BCA shares are currently trading at 1,325 a share.

Once the largest private bank, BCA is considered to be one of the gems among the assets IBRA controls.

Thus far, the agency has divested 32.5 percent through the stock market, with two public offerings in May 2000 and last July.

Yet efforts to divest BCA stakes through private placement have been without success.

IBRA's first attempt last year to sell off BCA to a strategic partner ran aground due to then unfavorable market conditions.

Legislators blocked the move over concern that a sluggish market would undermine BCA's value and lead to a fire sale of the bank.

IBRA's second attempt last March, analysts said, failed to generate enough interest due to an unattractive sale strategy.

Legislators had demanded that BCA remain under Indonesian control, allowing only a 30 percent stake to be sold to foreign investors.

That strategy, however, made BCA unattractive to investors seeking a controlling stake in the bank, according to analysts.

IBRA delayed the tender process, and an IBRA official later confirmed that only two final bidders had remained. Speculation rose that their bids had been too low.

State Minister of Enterprises Laksamana Sukardi then decided to relaunch the sale of it stake in BCA, this time with a 51 percent offering.

Felia said it would take more than one month for IBRA to short-list the bidders before announcing their names.

She did not say when IBRA expected to announce the bidders, but the agency is required to wrap up BCA's sale this year.

Privatizing BCA is part of the reform targets contained in the government's letter of intent (LoI) to the International Monetary Fund.(bkm)