IBRA reappoints financial advisors ahead of planned BCA sale
IBRA reappoints financial advisors ahead of planned BCA sale
Berni K Moestafa, The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA) has
reappointed PT Danareksa Sekuritas and PT Merrill Lynch Pte Ltd.
as its financial advisors for the sale of Bank Central Asia
(BCA).
Danareksa and Merrill Lynch had been IBRA's advisors for the
unsuccessful sale of a 30 percent stake in BCA last July.
In its press statement, IBRA fell short of explaining the
reasons for their reappointment. IBRA officials could not be
reached for comment.
The sale of BCA is part of economic reforms targets the
government must meet in order to keep receiving International
Monetary Fund (IMF) loans.
The IMF has pledged a US$5 billion aid package under a three-
year reform program, providing Indonesia stands firm on its
reforms.
Last year IBRA failed to sell a 40 percent stake in BCA after
legislators blocked the move, reasoning market conditions were
unfavorable at the time.
The IMF reacted to the delayed sale, and the failure to meet
several other reform targets, by freezing its lending program to
Indonesia. It resumed the program last August, after an eight-
month suspension.
This year, the government secured the approval of legislators
for BCA's sale but only after promising to split the process into
two phases.
To ensure the best possible price, legislators demanded that
IBRA divide up the 40 percent sell off into a secondary public
offering and private placement.
IBRA then sold a 10 percent stake through a secondary offering
in early July. But it floundered in its efforts to sell the other
30 percent.
Many believe the second attempt turned sour due to the low
bids received.
IBRA chairman I Putu Gede Ary Suta had earlier admitted that
the latest attempt to sell the 30 percent stake attracted only
two bidders.
He said the government should have offered a controlling stake
of at least 51 percent to make the sales pitch more attractive.
Under the August lending agreement with the IMF, the
government promised to sell off a 51 percent stake in the bank by
the end of this year.
IBRA once again sought the approval of the legislators for
upping the offered stake in BCA, which was forthcoming.
But again they demanded a two tier sales strategy for the same
reason, that is realizing the best possible price.
Based on that, IBRA then split the sale for the 51 percent
stake in two, with 21 percent to be sold later under an option.
The agency did not say when it expected to finalize the sale.
IBRA officials declined to reiterate their commitment to sell
the entire 51 percent this year as promised to the IMF.
Nonetheless, IMF senior representative in Jakarta David C.L.
Nellor expressed no concerns over the latest development.