IBRA tightens up criteria for BCA bidders: Mar'ie

IBRA tightens up criteria for BCA bidders: Mar'ie

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
said on Wednesday that the tender for its stake in Bank Central
Asia was still open to new bidders, but that the criteria for
investors were being tightened.

Chairman of the independent Oversight Committee of IBRA,
Mar'ie Muhammad, said the committee and IBRA had agreed on
tougher requirements for bidders to ascertain the most suitable
partner for the bank.

Mar'ie said that one of the criteria was specially designed to
ensure that BCA's strategic partner was capable of increasing the
bank's value.

"The institution to invest in BCA must have a thorough
knowledge of the banking industry," he added.

He said that the investor should be committed to the long-term
future of the bank, and keep its stake for a period of at least
five years. "Don't buy to sell," he said.

Furthermore, he went on, BCA's future strategic partner must
have a good track record and should also submit to a fit and
proper test by Bank Indonesia.

"But even if the investor is of good quality, has a good track
record and has passed BI (Bank Indonesia)'s fit and proper test,
it must also be able to disclose the source of its funds," Mar'ie
pointed out.

He said that bidders must certify that the money they used to
invest in BCA was free of any "hanky pangky."

"If it (the bidder) does not dare to disclose its funding
source, it will be struck off the list," Mar'ie remarked.

He said the tougher terms would restrict bidders to those who
would bring high added value and synergies to BCA.

The oversight committee is an independent body supervising
IBRA's policies. Its authority, however, is limited to non-
binding recommendations.

Mar'ie told reporters after a closed-doors meeting with IBRA
executives that the new criteria would also help ensure
transparency in the tender process for the 30 percent stake in
the publicly listed BCA.

The government must divest a 40 percent stake in the bank this
year, as part of its agreement with the International Monetary
Funds (IMF).

As agreed with legislators, the government early this month
sold a 10 percent stake through a secondary public offering, and
will sell the other 30 percent through private placement.

"And if it (the institution) has met all these criteria, there
is still one more additional requirement: the bid must be
competitive," he continued.

He said a strategic partner should not be allowed to force its
way into BCA simply because it offered the best qualities.

The imposition of the tough conditions has come on the heels
of the controversies that have shrouded the tender process which
started in May.

Critics have attacked IBRA for the lack of transparency
throughout the sale process and its foot-dragging in reaching a
deal.

BCA was due for divestment late last year. But legislators
blocked the sale on fears that sluggish market conditions would
drive the bank's price down.

The move was one of the reasons the IMF delayed the
disbursement of a $400 million loan tranche.

Last month IBRA said it was close to a deal, yet later
backtracked saying it needed more time to haggle for a higher
price.

The agency said it wanted bidders to pay a premium on the
price of BCA shares on the stock market.

Though IBRA has given no deadline on the sales, government
documents have cited the end of September as a target date.

Earlier this month, IBRA completed a secondary public offering
of a 10 percent stake in BCA that, according to the agency, was
oversubscribed.

But IBRA remains tightlipped over the status of the BCA tender
offering, saying that negotiations are still underway.

Mar'ie said IBRA was open to new bids as the tender process
had not been finalized yet.

Responding to questions about the re-tendering of the BCA
sale, Mar'ie said: "I've already checked that there is no winner
yet. It's still an ongoing process."

Earlier, IBRA chairman I Putu Gede Ary Suta said some 55 to 60
bidders had participated when the divestment process began in
May.

But he conceded he had not yet seen the names of the bidders.

It remains unclear how many bidders have survived, and at what
stage IBRA is in the tender process.

Unconfirmed reports say that only two bidders have made it
thus far: one foreign, the other a joint venture.

They are the investment firms Newbridge Capital and Indonesia
Recovery Company Limited (IRCL).

The U.S.-based Newbridge made a failed attempt last year to
acquire a stake in PT Astra International that was also put for
sale by IBRA.

Meanwhile, IRCL is a joint venture between local firm Bhakti
Capital Investama and Hong Kong's Asia Debt Management.

Given their nature as investment firms, Mar'ie's criteria may
jeopardize Newbridge and IRCL's chances of winning a stake in
BCA. (bkm)