Government denies raising BCA stake for sale

JAKARTA (JP): The government denied on Wednesday reports suggesting it planned to raise its stake for sale in the publicly-listed Bank Central Asia (BCA) to 40 percent via private placement.

State Minister for State Enterprises Laksamana Sukardi said that the government would stick with the initial plan to only sell a 30 percent stake in BCA to a strategic investor.

"There are many ideas. What's important is that we refer to our previous agreement with the DPR (House of Representatives)," he told reporters before a meeting with a visiting team from the International Monetary Fund (IMF).

The government and House Commission IX on the state budget and finance agreed in March to sell 30 percent of the former's shares in BCA via a private placement and another 10 percent through a secondary offering.

But local media reported on Wednesday that the Indonesian Bank Restructuring Agency (IBRA), which is conducting the BCA sale, considered raising the size of the strategic sale to 40 percent.

IBRA's oversight committee chief Mar'ie Muhammad was quoted as saying that IBRA chairman I Gede Putu Ary Suta had suggested in a letter that the size of the private placement be increased.

Mar'ie asserted the sale to a strategic investor would be more appealing if the government offered a controlling stake in the bank.

But the move would have to receive the legislature's approval first, he said.

Laksamana said that thus far the initial deal with the legislature had not changed.

Earlier he said the government wanted to relaunch the tender process for the BCA stake by repackaging the sales offer to investors.

His statement prompted rumors of the government planning to raise the stake offered to strategic investors.

The government has long been struggling to finalize the sale but fell short of closing a deal due to what analysts believed were excessively low bids.

A deal would bring the total government shareholding in BCA divested thus far to 62.5 percent.

Last year, the government sold the first 22.5 percent through an initial public offering, and another 10 percent through a secondary offering last July.

The divestment of BCA is one of the economic reform targets set out under the Letter of Intent (LoI) with the IMF.

Laksamana said he hoped to finalize the sales this year.

Under a draft of the LoI, the government must finalize the divestment in the third quarter of this year, or by September at the latest.

Laksamana did not comment further on the timetable.

The government should have finalized the sale last year, but legislators refused to approved it, reasoning that the then sluggish market conditions would drive down the price.

Subsequently, the delay and other missed reform targets prompted the IMF to suspend its loan program to Indonesia.

Analysts said a successful BCA sale would speed up the recovery of foreign investor confidence in Indonesia.

The visiting IMF team, which is here to draw up a new LoI, has yet to comment on the protracted BCA sale process.

"The government is considering what to do," said IMF chief representative for Indonesia David Nellor.

IBRA head of asset disposals Dasa Sutantio denied suggestions that the agency was making no headway with the BCA sale.

"Nothing is stuck, discussions are ongoing, the government and the IMF will find a solution for the best (tender) process," he said.

He added that the Fund may not go over the details during the discussion on the BCA divestment.(bkm)