BRI head office stormed by buyers
Rendi A Witular, The Jakarta Post, Jakarta
Despite a modest promotion campaign, state Bank Rakyat Indonesia (BRI) attracted a huge crowd on the first day of its share offering to the public on Wednesday.
Hundreds of the bank's customers stormed the bank's head office from the early morning, struggling to get a small chunk of the bank.
The queue of customers outside the bank's head office on Jl. Sudirman, South Jakarta stretched across the building's front yard and along the street.
Indra, a bank customer, said he arrived at the bank at 6:30 a.m. and was surprised to find his name 60th on the waiting list.
"The line in front of the bank was long even before I arrived. One person even arrived here at midnight," he said as quoted by Detik.com.
He said the situation became frantic and tense from 8 a.m. to 10 a.m. when more people came and started jostling people. Some people were disappointed at finding they were not able to buy as many shares as they had intended.
Only 10 people in front of the queue were able to buy the same number of shares stated on their purchase orders.
Indra said he could only buy 500 lots of shares or 25,000 shares with a nominal price of Rp 875 per share.
The government is selling 30 percent of the country's fourth largest bank in terms of assets to the public via an initial public offering (IPO), in a bid to help plug the state budget deficit this year, which is estimated to reach Rp 34.4 trillion (US$4.06 billion).
Five percent of the total shares planned for the IPO have been allocated for BRI customers. The shares were to be available from Oct. 22 to Oct. 29, but all the shares were sold on the first day.
The final pricing for the IPO will be decided on Oct. 28, while the offering for members of the public who are not customers of the bank is scheduled to take place from Nov. 3 to Nov. 5. The shares will be listed on the Jakarta Stock Exchange and the Surabaya Stock Exchange on Nov. 10.
"We did not expect the high demand. That's why we only allocated 5 percent of the shares planned for the IPO," BRI corporate secretary Rochidayat Taepur told The Jakarta Post.
He explained that the bank's customers still had an opportunity to buy shares, but they should not expect to secure a large number of shares as demand was high.
He said that BRI's shares had been oversubscribed by more than 1.5 times.
The BRI IPO has been launched without much fanfare, especially compared to state Bank Mandiri's IPO in June.
Mandiri's management published huge advertisements in the media to raise the interest of investors, both big and retail, in the stock sale.
Furthermore, some marketing innovations were also introduced as sweeteners for retail buyers. To mention a few, five luxury cars were offered to lucky investors, on top of plans by the bank's management to allocate 50 percent of its 2003 net profit for dividend payments to shareholders.
However, despite the lack of promotion, BRI has apparently aroused more public enthusiasm. BRI's IPO price is set at Rp 700 to Rp 875 per share, higher than that set for Mandiri, which was Rp 569 to Rp 695 per share.
Analysts said the higher price range could mean the government was more confident that the demand for BRI shares would be higher than for those of Mandiri.