IBRA urged to cancel Danamon divestment
The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA) should cancel the sale of a 51 percent stake in Bank Danamon if the bids offered are too low, senior legislators said on Monday.
Faisal Baasyir and Anthony Zedra Abidin, lawmakers from the House of Representatives Commission IX for financial affairs, said there was no point in proceeding with the plan if it failed to generate the best possible proceeds.
"It's about the timing. If it has yet to produce optimal results, then don't force it, cancel the divestment," Faisal was quoted by Antara as saying.
Anthony further said that it would be best to cancel the divestment given the unfavorable business climate, which would eventually affect the interests of investors.
"Now is not a good time because of the overall environment, the instability ... aside from our messy legal system. That's why we suggest a cancellation. If we force it, it would only allow the massive wholesale of state assets," he said.
The two failed to mention a desirable price for the Bank Danamon stake.
IBRA deputy chairman I Nyoman Sender said on Monday that the bids coming from the three existing bidders ranged from Rp 1,015 to Rp 1,100 per share.
It remains unclear as to which bidder has offered the highest price, but with around 2.5 billion shares on offer, even the highest offered price would only bring in some Rp 2.9 trillion in total proceeds, which is far below IBRA's initial target of around Rp 4 trillion.
Based on this argument, the legislators' objections appear justified.
Although the divestment does not require House approval, the government always regards the approval as crucial to avoid a backlash in the future.
The three bidders are the Asia Financial Indonesia consortium -- consisting of Temasek Holdings of Singapore and the Deutsche Bank -- the Bank Artha Graha consortium and the Bhakti Capital Indonesia consortium.
The three were deemed eligible by IBRA after they met the March 17 deadline to submit their official bids. The three bidders have until the middle of this month to conduct due diligence on the bank before making their final bids.
Among those that failed to submit bids in time was a consortium named Solid Investment and Finance Ltd. (SIF).
Despite having failed to met the deadline, the elimination of SIF as a bidder drew criticism. Kontan weekly reported that the consortium had offered a price of Rp 1,775 per share, well above other bidders.
Had IBRA accepted the bid, the sale would have raised a total of Rp 4.4 trillion in proceeds, or at least some Rp 1.6 trillion more than the bids of the other three consortia.