IBRA set to put 20 firms on the market this year

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) has added another 11 smaller companies onto its list of assets to be sold between April and December this year in a bid to help raise some Rp 18.9 trillion (US$2.7 billion) in state revenue, according to a senior official at the agency.

Group head of the agency's asset management investment unit Dasa Sutantio said on Thursday that the companies would be part of about 20 companies which would be sold through an initial public offering (IPO) this year.

Speaking on the sidelines of an Indonesian-Malaysian trade forum, Dasa said the agency expected to raise about half of the Rp 18.9 trillion target from the asset sale.

He said nine or 10 of the companies were categorized as large companies and that they were part of the fixed assets surrendered by former owners of Bank Central Asia (BCA), Bank Dagang Nasional Indonesia, Bank Umum Nasional, Bank Modern and Bank Danamon.

The former owners of the five banks pledged the assets in 1998 to repay their debts to the government.

"Most of the companies are from the Salim Group," Dasa told The Jakarta Post, referring to the former owner of Bank BCA.

IBRA vice chairman Arwin Rasyid said at the forum that the assets surrendered totaled 215 companies worth Rp 112 trillion at the time.

Arwin said that the sale of the assets was vital to help finance the state budget, particularly the interest cost of the government bonds issued to recapitalize the country's banking sector.

IBRA has been targeted to raise Rp 17 trillion in the current fiscal year ending March 31.

The agency has so far raised about Rp 10.5 trillion.

IBRA is expected to raise up to Rp 3 trillion from the sale of its 45 percent stake in the publicly listed auto giant PT Astra International before the end of this month.

A consortium of three appointed companies is currently conducting a due diligence process on Astra.

Arwin is confident that the Astra deal will go through by the March 25 deadline.

"The Astra deal is on track," he said, adding that the consortium members were expected to submit their final bids on March 23.

Arwin said that although the agency's primary target was to raise the Rp 17 trillion in cash, IBRA could also raises revenues from the sale of the treasury bonds issued by the government to recapitalize the country's bank recapitalization program.

He said that part of the recapitalized banks was owned by the agency.

The government has so far closed down 62 banks, nationalized 13 banks, and recapitalized 11 banks since the financial crisis hit in 1997.

But Arwin was confident the Rp 17 trillion target could be fulfilled in the form of cash.

There are concerns about whether IBRA can meet the Rp 17 trillion target, particularly after it delayed the IPO plans of Bank BCA until April or May.

In addition to asset sales, IBRA has also raised money from recovering bank nonperforming loans (NPLs) transferred to the agency and from the sale of "non-core assets."

IBRA currently controls about Rp 230 trillion worth of bank NPLs.

Asked if the agency would be forced to sell its stake in the Hongkong-listed conglomerate First Pacific Co. Ltd., and Singapore-listed consumer product company QAF Ltd., he said: "That is yet to be decided. We're still discussing it internally."

But a source said that the two companies would be a "back up" in case the agency encountered difficulties raising the Rp 17 trillion target cash.

"We can't announce them right now because it would put pressure the market price of the companies. It would be a disadvantage to us," he said.

Arwin also said that the agency expected to receive some Rp 25 trillion worth of fixed assets this year from the former owners of the 38 banks closed down in 1999.

According to an IBRA document, out of the 70 former owners of the 38 banks, 45 had signed an memorandum of understanding (MOU) to settle their obligations to the government, while the remaining 25 were still in the negotiation process.

It said that six of the former bank owners had submitted a list of their assets to IBRA, and 10 others would follow suit.

It added that most of the former bank owners would submit their list of assets after a new settlement mechanism proposed by IBRA had been approved by the Financial Sector Policy Committee, which groups several senior economics ministers.(rei)