Govt rakes in Rp 1.74t from Danamon sale

Dadan Wijaksana, The Jakarta Post/Jakarta

The government raised Rp 1.74 trillion (US$187 million) in cash on Thursday from the sale of a 10 percent stake in Bank Danamon, the Ministry of Finance's asset management company PPA said.

Raden Pardede, PPA vice president director, told The Jakarta Post that the agency had sold 490.87 million shares in the bank priced at Rp 3,550 per share -- the proceeds of which would help cover the 2004 state budget deficit.

"If I'm not mistaken, there are about 34 local and foreign companies which bought the shares," said Raden, adding that the sale was 2.6 times oversubscribed.

The shares were sold on the Jakarta Stock Exchange at a slightly-discounted price as compared to their closing price of Rp 3,575 the day before.

The government is under pressure to intensify its asset-sale program, as soaring oil prices are pushing up various expenditure posts -- notably the fuel subsidy, and it is feared it will eventually widen the 2004 budget deficit.

Under the revision of the state budget, the deficit is targeted at Rp 26.3 trillion this year.

It reached Rp 25.5 trillion in the first nine months of the year.

Coupled with Rp 2.77 trillion in proceeds from the sale of a 51 percent stake in Bank Permata recently -- in which a consortium of U.K-based lender Standard Chartered Bank and Indonesia's automotive firm PT Astra International was declared the winner, the PPA has so far contributed some Rp 4.51 trillion to the state, Raden added.

Some analysts saw the price tag as too low.

"The price is quite low for Danamon," said Susiyanto, who helps oversee the equivalent of $1.65 billion for BNI Aset Manajemen in Jakarta, Bloomberg reported.

"A fair value would be around Rp 4,000 a share. The bank is consistently creating value in terms of earnings, which will grow at least 20 percent this year."

Danamon, the country's fifth largest lender, is 62 percent controlled by Temasek Holdings Pte -- the Singapore government's investment company -- and Deutsche Bank AG.

After Thursday's sale, the government's ownership in the bank was cut to 10.5 percent.

PPA, Raden added, would leave it to the government whether it would go ahead with initial plans to unload more government shares in a number of banks later this year. PPA manages these government assets.

The government has said it was planning to sell minority stakes in four more banks later this year, most likely its shares in Bank Central Asia (BCA), Bank Internasional Indonesia (BII), Bank Niaga, and Bank Permata.

At present, PPA owns a 5 percent stake in BCA, 20.8 percent in Niaga, 21.5 percent in Niaga, and 20 percent in Permata.

"It's up to the government. But, if they do decide to do that, then we at the PPA have to be ready," said Raden.

All the banks were recapitalized by the government, via IBRA, as a bail-out program to help rescue the banking sector, which was severely devastated by the 1997-1998 financial crisis.