BRI to sell 36% stake generating at least Rp 2.11 trillion

The Jakarta Post, Jakarta

State-owned Bank Rakyat Indonesia (BRI) officially announced on Thursday that it would sell 36 percent of its shares, or a total of 4.23 billion shares, to the public through its upcoming initial public offering (IPO) later this month.

In its published prospectus, the micro-financing bank said that its shares would be priced at Rp 500 each (around 6 U.S. cents), meaning that if the IPO ran smoothly as planned, the government, as the 100 percent owner of the bank, would rake in at least Rp 2.11 trillion.

BRI, the country's fourth largest bank, has allocated another 1.05 billion shares, or 9 percent of its equity, for sale to investors if the demand for its shares is greater than the supply.

The bank will offer the shares to institutions in the last week of October, and retail investors in the following week. BRI is scheduled to list its shares on Nov. 10 on the Jakarta and Surabaya Stock Exchanges.

BRI has appointed state-owned brokerage house PT Bahana Sekuritas as the lead underwriter for the IPO.

To encourage investors to buy its shares, BRI is offering a sweetener in the form of a 50 percent dividend payout based on its 2003 performance. The dividend will be distributed in 2004.

In the first semester of this year, BRI booked a net profit of Rp 1.182 trillion, or an increase of 8 percent over last year.

Elsewhere, the bank said in the prospectus that some of the proceeds from the IPO would be used to strengthen its capital base.

Earlier, the bank said that without an injection of new capital, the bank's capital adequacy ratio (CAR) would decline to around 11.5 percent in 2004 from 14.7 percent at present. CAR is the ratio between capital and risk-weighted assets like loans.

BRI's CAR has been in decline over the past few months, reaching 12.36 percent as of the end of June, down from 14.7 percent in March.

BRI focuses on extending loans for micro, small and medium enterprises. Of Rp 43.6 trillion in outstanding loans as of June this year, 91.62 percent had been extended to such businesses.

The government needs to sell state assets, including BRI, to help plug the widening budget deficit, which it is estimated will reach Rp 35.2 trillion this year.