Farallon may pull out from BCA bidding process

Farallon may pull out from BCA bidding process

Berni K. Moestafa and Dadan Wijaksana, The Jakarta Post, Jakarta

As the race to win a 51 percent stake in Bank Central Asia
(BCA) nears its end, one of two favorite bidders, the U.S.
investment firm Farallon Capital Management, said it might pull
out from the bidding process, citing concerns of unfair
practices.

Farallon investment director G Raymond Zage III said on Monday
he suspected bidders altered their final bids after submitting
them to the Indonesian Bank Restructuring Agency (IBRA) on Jan.
28.

According to him, final bids should remain final, and changing
them may be seen as a manipulation of the sale process.

"If the end conclusion is that no matter how you play the game
you won't win, than it sure doesn't make sense to keep on
playing," he said, explaining this applied to all members of the
consortium Farallon was leading in the bid.

Four consortia submitted their final bids for BCA. IBRA should
have named a winner shortly afterwards, but decided to wait until
after Bank Indonesia examined the bidders' credentials.

That was four weeks ago, but since then IBRA has allowed
bidders to "revise" their final bids.

Zage said IBRA's advisors for the BCA sale approached the
consortium for a better bid, which he rejected as he felt
Farallon had already made their best offer.

"You have this huge amount of time after the final bids were
submitted when nobody knows what's happened," Zage said.

Farallon's concern comes amid talks that its closest rival,
the consortium led by the British-based Standard Chartered Bank,
were offered the chance to top Farallon's final bid.

Sources said the government was leaning in favor of StanChart
after the bank was forced out of a deal to acquire Bank Bali.

But pressure against StanChart also grew on reports its local
bidding partner PT Berca decided to pull out from the contest.

Berca was quoted by Reuters as saying it decided to withdraw
from the bidding process due to heavy risks. There was no
explanation on what was termed heavy risk, but sources said Berca
pulled out because it had failed Bank Indonesia's screening test.

StanChart reportedly said it would go ahead without Berca, and
give the latter an option to purchase BCA's shares later on.

The newswire said local bidder PT Jamsostek also pulled out,
citing political reasons, which the state-owned pensions firm did
not elaborate on. Jamsostek was a member of the local GKBI
consortium. The other local consortium is the Bank Mega
consortium.

IBRA took over BCA after spending billions of U.S. dollars to
bail out the bank from the financial crisis in the late 90s.

BCA's sale would mark the first of its kind, and would lead
the way for other bank sales by IBRA. Also on the tables this
year is the sale of Bank Niaga.

Selling BCA to the right investor without a glitch is
paramount in ending the dry spell of investment in this country.

The process has been mired in politicking that ended twice
with attempts to sell the bank since its launch in 2000.

Elsewhere, Bank Indonesia said it had completed its fit and
proper test on the four bidders on Monday. The winner for BCA
will now be announced within the next 10 days, IBRA added.