Excitement grows in buildup to Mandiri IPO
Dadan Wijaksana, The Jakarta Post, Jakarta
As the sale of a 15 percent stake in Bank Mandiri comes closer, public interest has become intense, thanks in part to the massive publicity campaign being run by the country's largest bank.
The level of interest has also helped create positive sentiment in the market, according to analysts.
While the initial public offering (IPO) is still several weeks away, aggressive promotion by the bank, coupled with a variety of marketing innovations, have got the public exited about the sale, the analysts said.
"We knew that it (the IPO) would be huge given that Mandiri is the largest bank in the country. But we did not expect that the IPO plan would be as popular as it is now. They're doing a good job in marketing.
"In fact, the (IPO) promotion being conducted by the bank is probably the biggest ever undertaken in the country," a researcher at a Jakarta-based foreign bank told The Jakarta Post on Wednesday.
Since the government gave the go-ahead to the plan last month, after about two years of uncertainty, Mandiri's management has been publishing huge advertisements in the media as part of its efforts to raise the interest of investors, both big and retail, in the stock sale.
Furthermore, some marketing innovations have also been introduced as sweeteners for retail buyers.
To mention a few, five luxury cars are up for grabs by 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.
Mandiri, whose total assets stand at about Rp 250 trillion, is scheduled to offer around 2 billion of its shares in a price range of between Rp 569 and Rp 695 per share to the public from July 2 to July 4, with one third of these being sold on the domestic market.
The plan has already had an impact on the market and has lifted the price of quite a number of banks' shares.
Traders claim the IPO plans will help increase investor confidence in the country's banking sector as, after selling its shares to the public, Mandiri's management would have no alternative but to be prudent and transparent in managing the bank.
Asked whether all the hype about the IPO would automatically be translated into high demand during the offering, the analyst replied; "It will definitely help, but it won't be the only factor.
"I personally think the IPO will be a huge success, but it's not entirely because of good marketing. It's more because of the price. I think most investors will see the current price as safe," he said.
Another analyst at a state-owned bank agreed, saying that since Mandiri was a major bank, investors would care more about the bank's fundamentals rather than its marketing abilities.
"Good marketing will help, but at the end of the day investors will set their sights on the bank's fundamentals. This will determine whether or not the plan will be successful.
"In the case of Mandiri, I have no doubt that it will be a successful bid due to a combination of the bank's good prospects and the relatively low price," he added.
The current pricing represents between 0.9-1.1 times the bank's book value, lower than that of Bank Central Asia (BCA), Bank Niaga and Bank Danamon, whose shares were sold at more than 1.2 times their book value.