Divestment price of Bank Niaga

Divestment price of Bank Niaga

The plan of the Indonesian Bank Restructuring Agency (IBRA) to
divest the government's shares in PT Bank Niaga Tbk will again
have to be postponed because the prospective investor, Malaysia's
Commerce Asset Bhd and Indonesia's House of People's
Representatives, whose approval IBRA must have for its every
step, are yet to agree on the price of the shares to be
transacted.

What matters most in this divestment process is the benchmark
to determine the price of the shares to be sold. IBRA and the
House must first agree on this standard because relying on the
market price in the case of a listed company can be misleading.
The market price can serve as a standard only if the market is
really ideal: it does not produce asymmetric information; it is
free from monopoly and dominant market power and it is governed
by impartial government policies. Unfortunately, the Indonesian
capital market is still far from this ideal state. Relying on the
market price in a divestment process is therefore really risky.

IBRA as the shareholder must have enough information to enable
it to set a proper price, or at least, a proper floor price, for
the shares of Bank Niaga. This price will determine whether the
divestment must go on or be put off till a better time.

Then IBRA must also work hard to get the understanding of the
lawmakers to ensure that both sides use the same parameter in the
divestment of companies whose shares are controlled by the
government.

-- Bisnis Indonesia, Jakarta