BCA shares oversubscribed by 30 percent, says IBRA

JAKARTA (JP): The second issue of publicly listed Bank Central Asia (BCA) shares that offered 10 percent of the government's stake in the bank has been oversubscribed by 30 percent, the Indonesian Bank Restructuring Agency (IBRA) said on Monday.

IBRA deputy chairman for bank restructuring Felia Salim said the agency was satisfied with the market reception to the July 4 to July 6 public offering.

"The high interest was mostly shown by local investors, but orders from foreign investors were also considerable," she said in a statement.

Felia said that some foreign investors who had been active in the local stock market before the 1997 economic crisis also subscribed to BCA's shares.

BCA made its initial public offering in May last year, after the government nationalized what had been the country's largest private bank.

The second public offering saw the government sell 10 percent of BCA's total 588.8 million shares, offered at Rp 900 (about 7.96 U.S. cents) a share.

IBRA has said it expects to reap about Rp 500 billion from the public offering, which is part of the government's plan to unload a 40 percent stake in the bank to raise funds for the state budget and to fulfill the reform targets agreed to with the International Monetary Fund (IMF).

Another 30 percent stake will be sold to strategic investors through a competitive bid that is currently underway.

IBRA officials have been tightlipped over the progress of the competitive bid, fearing it might affect talks with BCA's short- listed bidders.

When IBRA failed to announce the winning bidder late last month as originally planned, suspicion rose that the agency was been tied up in tough negotiations with the bidders.

The agency said it was extending its negotiations with the bidders to strike a better deal. This statement, however, only added to suspicion that the bids received were below expectations.

Extending the negotiations may prevent IBRA from reaching its target of divesting the 40 percent equity stake in BCA by this month.

BCA's divestment, along with that of Bank Niaga, was to have been concluded last year, as part of Indonesia's economic reform targets set out under the letter of intent signed with the IMF.

The government delayed the divestments after legislators opposed the move, on the grounds that a sluggish market made the sales untimely.

But the delay prompted the IMF to freeze its loan program to Indonesia. The fund has been holding back on releasing its next $400 million loan tranche since last December.

A visiting IMF team is currently in Jakarta to negotiate the next letter of intent with the government, which is a prerequisite for the disbursement of its loans.

The team is led by the fund's Asia Pacific deputy director, Anoop Singh, who has refused to comment on the progress made in BCA's divestment.

Singh met with IBRA officials on Monday, but declined to reveal any details of their discussions. (bkm)