IBRA sets BCA share price at Rp 1,400
IBRA sets BCA share price at Rp 1,400
JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
has announced it will sell Bank Central Asia (BCA) shares at Rp
1,400 (17.5 U.S. cents).
IBRA chairman Cacuk Sudarijanto said the agency planned to
sell 22.5 percent of BCA's shares in the initial public offering
(IPO) on May 31 and expected to raise Rp 927.3 billion from the
share offering.
Cacuk admitted that the price was at the lower end of IBRA's
initial target range of between Rp 1,350 and Rp 1,750.
"The price is set at the lower end of the target range due to
the still unfavorable banking conditions in East Asia and the
Pacific region," said Cacuk, who just returned from a road show
covering Hong Kong, Singapore, the United States and Europe to
promote BCA's IPO.
Investors in London, he added, were more interested in
learning about Indonesia's security and political situation
instead of details on BCA's IPO.
"This shows that the international market is very careful in
assessing our political situation," he said.
IBRA vice chairman Jerry Ng said that of the 22.5 percent
stake on offer, he expected more than 20 percent would be bought
by foreign investors.
He said the Rp 1,400 price was 1.7 times BCA's 1999 book
value, or 1.2 times the 2000 prospective book value, still lower
than the average level of 1.3 times in the region.
"We believe BCA shares will stimulate the capital market,
especially the banking sector," he said.
BCA is 92.8 percent owned by IBRA, a unit of the finance
ministry. The government nationalized BCA in May 1998 following a
massive run on the bank.
The bank's former founder, the Salim Group, owns the remaining
7.2 percent.
According to Cacuk, as a shareholder, the Salim Group is not
allowed to purchase BCA's shares during the IPO.
Under existing regulations, the group is only allowed to
purchase the shares through the secondary market.
Cacuk said that if the Salim Group intended to buy more than 5
percent of BCA, it must first report to the Capital Market
Supervisory Agency (Bapepam).
The Salim Group must also wait for at least six months after
the IPO before it can sell its shares, he added.
"After the IPO, the government will still own a 70 percent
stake in BCA," he said.
Cacuk said BCA shares would be offered from May 19 to May 24.
He expected to obtain Bapepam's approval by May 12.
BCA's lead underwriters include Merril Lynch, Lehman Brothers,
PT Danareksa Securities and PT Bahana Securities.
Jerry described the IPO of the once largest private bank as a
landmark in the privatization of other banks currently under
IBRA's care.
IBRA took over some Rp 600 trillion in assets of banks and
companies after their shareholders failed to repay their debts to
state banks and the government.
Under IBRA, BCA booked a net profit Rp 641.29 billion in 1999,
a turnaround from a loss of Rp 28.4 trillion in 1998.
According to Jerry, a successful BCA IPO would boost the
country's economic recovery.
"The IPO will not only generate cash, but also raise
investors' confidence in the Indonesian capital market," Jerry
said. (bkm)