BNI's share offering oversubscribed by 350%

JAKARTA (JP): State-owned PT Bank Negara Indonesia (BNI) 1946's initial public offering was oversubscribed by almost 350 percent with foreign investors accounting for most of the orders.

Agus Projosasmito, president of state-owned PT Danareksa Sekuritas, the lead underwriter, said yesterday that there were 4.84 billion orders, while only 1.08 billion shares, or 25 percent of the bank's enlarged capital, were on offer.

"We therefore have to reduce the allotment to foreign investors to give more opportunity to domestic investors," Agus told journalists at his office.

Foreign investors subscribed to 2.88 billion shares and domestic investors to 1.96 billion.

"This privatization is the largest in terms of investors' participation," Agus said.

The government has privatized four state firms through domestic and international stock exchanges: cement firm PT Semen Gresik, telecommunication firms PT Indosat and PT Telkom and tin miner PT Tambang Timah.

Agus said his team of underwriters had decided to reduce the foreign allotment of the total offering from 49 percent, the maximum allowed by capital market rules, to 43.06 percent.

"By this, we can give local retail investors more opportunity to get BNI shares," Agus said.

He said domestic investors subscribing to BNI shares came from Jakarta, Medan, Bandung, Semarang, Surabaya, Malang and Ujungpandang.

But he warned that not all local investors, including those subscribing to only one lot of 500 common shares, would have their orders met because of the limited offering.

Wahzari Wardaya, another Danareksa Sekuritas executive, said the team of underwriters had received 787,665 subscription forms, of which 786,267 had come from local investors.

A total 617,693 local investors filed orders for only one lot. But the allotment available for retail domestic investors was only 212,725,500 shares, or 425,451 lots.

"Therefore, we were compelled to run a lucky draw to distribute the available stocks," Wahzari said.

The lottery was conducted Nov. 13, and was witnessed by public notary Fatma Ul Chasanah.

Wahzari noted that 59.5 percent of the 1.08 billion shares were offered through fixed allotments, meaning that investors would get the number of shares they subscribed to.

The distribution of the fixed allotment offering is as follows: 27.35 percent of the total shares are allocated for foreign investors, 22.21 percent for local investors and 10 percent for BNI employees.

Therefore, only 40.5 percent of the 1.08 billion stocks are available to foreign and domestic retail investors.

He dismissed rumors that his company had violated procedures by selling fixed-allotment shares to individual investors, especially wealthy individuals. He said the fixed allotment shares went mostly to institutional investors such as mutual funds, pension funds and insurance firms.

Both Agus and Wahzari said they held the news conference to explain the allotment and distribution of BNI shares, which has drawn wide criticism from underwriters and investors.

Seventy-nine securities firms are acting as underwriters and sub-underwriters for the initial public offering, while smaller brokerages are acting as agents.

Agus said Danareksa would refund the investors who could not get all the shares they ordered on Nov. 21 before BNI's shares are listed on the Jakarta and Surabaya stock exchanges on Nov. 25.

He said that, unlike other state firms such as Telkom and Indosat which were virtual monopolies, BNI had many competitors already listed on the domestic stock exchanges.

Twenty-two banks are listed on the Jakarta Stock Exchange.

The BNI shares, priced at Rp 850 a share (US 36 cents) in the initial public offering, have a prospective price-earning ratio of eight this year, below the industry's average of ten.

BNI, with total assets of Rp 32.35 trillion ($13.7 billion) on June 30, is the country's largest commercial bank.

It expects to raise about Rp 1 trillion from the public offering.

The bank's net interest revenue in the first half of 1996 was Rp 405.4 billion, down 0.7 percent from the same period in 1995. Total revenue in the first half of 1996 was Rp 663 billion, an increase of 14.3 percent from the same period last year.

Operating expenses for the first six months of the year stood at Rp 471.2 billion, up 15.9 percent compared to the corresponding period for 1995.

On June 30 it had deposits of Rp 17.90 trillion and credits of Rp 20.44 trillion. (rid)