Farallon may pull out of BCA bid
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.