Govt may sell entire stake in Permata

Rendi A. Witular, Jakarta

The government plans to sell its entire stake in Bank Permata, the country's seventh largest bank in terms of assets, to strategic investors this year in a bid to obtain maximum proceeds from the divestment.

President director of PT Perusahaan Pengelolaan Aset (PPA) Mohammad Syahrial said the plan to unload the government's entire stake in Bank Permata was one of three options proposed to the House of Representatives for approval.

"We want maximum proceeds from the sale. Selling the stake in its entirety at one time to strategic investors will enable us to get the highest possible price for the shares," Syahrial said on Thursday after a meeting with House Commission IX for financial affairs.

The government has a 97.17 percent stake in the publicly listed Permata, which is managed by the PPA, an entity under the Ministry of Finance.

The government earlier said it would only sell 71 percent of its stake in the bank this year, broken down into 51 percent to be offered to strategic investors and 20 percent to public investors.

Syahrial said the other two options were to sell 51 percent of the stake to strategic investors and 46.17 to public investors, or to sell 71 percent of the stake to strategic investors and 26.17 percent to the public.

However, the selling price in these divestment options would be lower than that of the first option, and the divestment process would be longer and more complex, he said.

Commission IX chairman Emir Moeis said the government would invite Minister of Finance Boediono and State Minister of State Enterprises Laksamana Sukardi to elaborate upon the divestment plans, so that the Commission could select one of the options.

Elsewhere, Syahrial said the Permata shares could be worth more than 1.8 times its book value.

"Bank NISP and Bank Buana have sold a part of their shares to foreign investors at more than double its book value. We expect Permata, which is larger than those two banks, will follow suit," he said.

The government has hired ABN Amro Holdings NV to help arrange the stake sale later this year, and 19 investors -- 12 foreign and seven domestic -- have expressed their interest in bidding for Permata.

Syahrial acknowledged the PPA had received a recommendation from the House to prioritize local investors in order to create healthy competition in the banking industry.

"We will not limit foreign-based investors during the tender. This is an open tender, (so) anyone can join in. But we will prioritize local investors," he said, suggesting that local investors should form a consortium with foreign financial institutions in order to raise sufficient capital to participate in the tender.

The government is planning domestic and international road shows in the latter half of July to promote the Permata tender. The winning bidder will be announced in the fourth week of October.

Permata shares ended unchanged on Thursday at Rp 675 on the Jakarta Stock Exchange.

Permata's financial performance (in Rp billions)

2002 2003 2004 (Q1)

Assets 28,028 29,035 29,769

Capital 1,157 1,714 1,841

Net interest revenue 357 1,096 372

Net profit (losses) (808) 558 127

Indicators (%)

Non-performing loans (NPL) 27.20 11.20 8.34

Capital adequacy ratio (CAR) 10.40 10.80 12.84

Source: Bank Permata