IBRA may delay BCA share issue till March

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) may have to delay the crucial initial public offering (IPO) plans of Bank Central Asia (BCA) until March because the agency has been slow in registering the plans at the country's Capital Market Supervisory Agency (Bapepam).

Head of IBRA's asset management and investment team Dasa Sutanto confirmed on Sunday that the agency had not yet registered the IPO plans.

"We'll do it first thing next week (this week)," he told The Jakarta Post by phone.

The BCA IPO was set for February. But according to a Bapepam ruling, an IPO plan must be registered at the capital market watchdog 45 days before the primary offering is made.

Dasa said the February schedule was an IBRA internal target to push its staff to work harder to realize the BCA IPO so that it could meet the government's target of raising some Rp 17 trillion (US$2.3 billion) in cash in the current fiscal year ending on March 31.

He was confident the IPO could go through in March, while saying the BCA IPO was crucial to restoring investors' confidence in the country's ailing economy.

IBRA has said it plans to raise Rp 3 trillion in proceeds from the BCA IPO by selling a 30 percent stake.

But Dasa said the agency could sell less than 30 percent if there was a strong market demand for the BCA offering.

Asked why IBRA had been slow in making the registration at Bapepam, Dasa said the agency had to focus first on improving BCA's credit supervision department, which had been one of the bank's greatest weaknesses.

He said a foreign bank had been assigned to do the job.

"We wanted to make sure everything was okay before we launched the bank on the market," he said.

IBRA, a unit of the finance ministry, took over BCA in 1998 after its owners, the Salim Group and two children of former president Soeharto, failed to repay the bank's debts to the central bank.

BCA, the country's largest private bank, has total assets of some Rp 84.4 trillion and operates some 767 branches throughout the country.

IBRA has appointed Lehman Brothers, Merrill Lynch and local securities firms PT Bahana Securities and PT Danareksa Securities to manage the BCA IPO.

The agency controls some Rp 600 trillion worth of various banking assets. It is mandated to sell or recover the assets to raise cash to help finance the government's costly bank restructuring and recapitalization program.

In the current fiscal year, IBRA must raise Rp 17 trillion to help finance the Rp 34 trillion interest cost of the bank restructuring and recapitalization bonds issued by the government.

IBRA is targeted to raise some Rp 16 trillion in cash in the coming fiscal year.

IBRA has said it had so far raised more than Rp 10 trillion in cash and is confident that it could meet the Rp 17 trillion target.

The BCA IPO and the plans to sell its 40 percent ownership in the publicly listed auto giant PT Astra International would be the major contributor to fulfilling that target.

But the planned sale of Astra seemed to fall into uncertainty after IBRA was reportedly in a spat with Astra's Rini Soewandi- led management team.

The agency has indicated that it is proposing to dismiss Astra's current management team at an upcoming Feb. 8 extraordinary shareholders meeting.

IBRA has accused the management team of obstructing the planned sale of its equity shares in the company to an American investor consortium led by Newbridge Capital and Gilbert Global Equity.

However, the management denied all the allegations, arguing that it wanted only to ensure that all securities market regulations and good corporate governance practices were fully observed in the transaction.

Meanwhile, a "respected blue chip financial investor" has reportedly offered a better price for IBRA's stake in Astra. (rei)