Govt delays Mandiri, BRI sales

Govt delays Mandiri, BRI sales

Bloomberg, Jakarta

The government is delaying the sale of stakes in Bank Mandiri, the nation's largest bank, and Bank Rakyat Indonesia (BRI) because it won't get the Rp 5.55 trillion ($545 million) it wants to raise if it sells now, a minister said.

"If we are forced to sell now the shares may be sold at close to their book value, which would be a loss to us and the dilution to the government's ownership would be too big," State Enterprises Minister Sugiharto said on Saturday evening.

He declined to say when the government plans to sell the banks.

The government has been selling stakes in banks and other companies that it acquired after the 1997 Asian financial crisis to trim its budget deficit, which is forecast to reach Rp 24.9 trillion this year, and recoup part of the more than Rp 450 trillion that it spent bailing out banks after the crisis.

The government wants to raise Rp 2.8 trillion from selling a 10 percent stake in Mandiri and Rp 2.75 trillion from selling a 5.67 percent stake in BRI, the country's fourth-largest lender by assets, Sugiharto said.

According to Bloomberg calculations, the government wants to sell the 10 percent Mandiri stake at about Rp 1,390 a share, or equal to its current market price, and the stake in BRI at about Rp 4,082 a share, or 70 percent more than its Oct. 21 close price of Rp 2,400.

"After careful consideration and discussions with our financial advisers we concluded that the market is currently not conducive to selling the bank shares now," Sugiharto said.

To meet the government's Rp 3.5 trillion target from asset sales this year the state enterprises ministry is also exploring the possibility of having a national infrastructure company, possibly a telecommunications company, acquire a smaller infrastructure company.

The government will raise funds from selling a stake at the smaller infrastructure company to the bigger one, Sugiharto said, declining to provide details.