Grenfell pulls out of Makindo

JAKARTA (JP): Makindo's president Gunawan Yusuf confirmed Saturday that Deutsche Morgan Grenfell Indonesia had pulled out from being the main underwriter of his company's initial public offering.

Gunawan, however, denied a press report that Grenfell's withdrawal was made due to predictions that his company could face a gloomy capital market debut.

Grenfell's withdrawal was aimed at avoiding a conflict of interest because Morgan Grenfell was likely to form a strategic alliance with Makindo in the next few months, he said.

But he refused to explain details of the alliance plan, stating that they were still working on the plan.

"(If Morgan Grenfell has a stake in Makindo), the company would certainly have a conflict of interest from being a lead managing underwriter," Gunawan said. "So the company's withdrawal has nothing to do with the prospects of the initial public offering," he added.

Gunawan said BNP PrimeEast and Bahana Securities would replace Morgan Grenfell as the lead managing underwriters for Makindo's initial public offering (IPO).

He said Makindo expected to raise around Rp 367.57 billion in fresh funds from the public through the offering of 377 million shares this month.

Makindo shares, each with a par value of Rp 500, would be priced at Rp 975 each.

Around 67 percent of the proceeds from the IPO would be used to increase the company's working capital, 29 percent to finance the institutional investors and 4 percent to improve the company's information technology, he said.

He said that the company would list its shares both in the Jakarta and Surabaya Stock Exchanges on January 9.

Makindo, set up in 1973, has total assets of Rp 148.13 billion as of December 1996. It recorded a net profit of Rp 32 billion in this year's first semester compared to Rp 9 billion in the corresponding period last year.

Makindo will be the third securities firm listed in the Jakarta and Surabaya Stock Exchanges after Lippo Securities and Bhakti Investama.

Some analysts have predicted that Makindo's IPO plan amidst the current sluggish market conditions would result in failure.

The analysts said that share prices for Astra Agro Lestari, which recently listed in JSX and SSX, for example, continued to decline from its initial price.

"If that is an indication of market trends, Makindo's stock price will decline too," one analyst said. (aly)