Thu, 11 May 2000

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)