Govt plans to sell 51% stake in BCA, Niaga this year

JAKARTA (JP): The government plans to sell off another 51 percent stake in the publicly listed PT Bank Central Asia (BCA) and Bank Niaga by the end of this year, pending consultation with the House of Representatives.

According to the new Letter of Intent (LoI) signed with the International Monetary Fund (IMF), the government is committed to privatizing a majority of its shares in BCA and Bank Niaga this year.

"The GOI (government of Indonesia) is discussing with the Parliament its intention to offer a further 51 percent (of its stake in BCA) for sale to a strategic partner by year-end," the LoI stated, copies of which were distributed to the press on Monday.

As agreed with legislators, the government, through the Indonesian Bank Restructuring Agency (IBRA), had previously planned to sell only 30 percent to a strategic investor this year.

Last year, the agency sold 22.5 percent of BCA through an initial public offering, and another 10 percent through a secondary offering in July this year.

"The sale process is largely taking place through private placement to strategic investors so as to ensure that both banks attract strong partners," the LoI stated.

BCA is one of IBRA's most valuable assets, expected to attract high bids due to its strong footing in the retail market.

IBRA has been trying for months to sell the 30 percent stake in BCA at an acceptable price.

The agency has failed to announce the final bidders for the bank since late July, due to what many believed to be a result of low bids.

IBRA chairman I Putu Gede Ary Suta complained that only offering a 30 percent stake was inadequate for attracting the investors.

"When we talk about a strategic sale, then it naturally means control ... a 51 percent stake or above," he said.

Strategic investors would be more willing to pay a premium price for BCA shares if they were offered a controlling stake in the bank, he said.

The president of securities house PT Vickers Ballas Tamara, David Chang, said offering a 51 percent stake would widen the field of investors to choose from.

While raising the chance of attracting strategic partners such as foreign banks, a 51 percent stake would also allow the government to split the shareholding between two investors, according to Chang.

"A 51 percent stake is quite significant ... and there are investors who want to invest in Indonesia."

As for Bank Niaga, IBRA has yet to announce preparations for the bank's sale.

The LoI further said that IBRA would divest its remaining shares in BCA and Bank Niaga by 2003.

It said that a comprehensive divestment plan would be drawn up and presented before legislators in the coming months.(bkm)