Sat, 29 Apr 2000

IBRA wants 'fair' price for BCA public offering

By Reiner S.

SINGAPORE (JP): The Indonesian Bank Restructuring Agency (IBRA) wants to set a "fair" price for the landmark initial public offering of Bank Central Asia (BCA).

The are doing so in order to help maintain a positive momentum for the country's future IPO or privatization programs, according to agency deputy chairman Jerry Ng.

Jerry said on Friday that in addition to raising cash to help finance the state budget, IBRA wanted to ensure the success of the BCA IPO and to make sure investors buying into the IPO would not be disappointed.

"We want the BCA IPO to build up a momentum for future Indonesian IPOs ... But it is also important not to cause a loss for investors which will only create a bad image," he told reporters following a gathering with potential investors during the second round of an overseas road show.

But Jerry declined to confirm whether the final IPO price would be kept within the indicative price target of Rp 1,350 to Rp 1,750 per share or beyond that price range.

"It's too early to say," he remarked.

Meanwhile, Jos Parengkuan of the state-owned PT Danareksa Securities, one of the leading underwriters of the IPO, said that the final IPO price should not be set beyond the indicative price range to ensure potential gain to investors once the bank shares were listed in the secondary market.

He conceded that the success in the BCA IPO would help revive investors' confidence in the country's crisis-ravaged economy.

IBRA plans to offer between 15 to 30 percent of BCA shares through IPO sometime in the middle of next month to raise cash to help finance the 2000 state budget.

A domestic road show had just been completed last week. Overseas road shows started with Hong Kong on Wednesday, followed by Singapore on Friday.

The next stop will be the U.S. including New York, Boston, and Washington D.C., and finally Europe including London, Edinburgh, and Amsterdam.

Jerry claimed that so far the response in Hong Kong and Singapore was very positive.

"This is a good sign," he said, pointing out that by showing up at luncheons and one-on-one meetings held during the road shows was an indication that investors were seriously considering investing in BCA.

Jerry declined to say whether the great enthusiasm would prompt IBRA to sell the BCA shares at the upper 30 percent limit, although he admitted that judging by the current enthusiasm there should be no problem for IBRA to sell 30 percent shares in BCA.

But Jerry stressed that it's important to maintain a conducive domestic political environment to ensure the full success of the BCA IPO.

He admitted that some investors expressed their concern over the domestic political situation, but many long-term investors were convinced that Indonesia was moving in the right direction.

IBRA controls around 92 percent of BCA since the government nationalized the bank in May 1998 following a massive run on the bank's deposit in the wake of the downfall of former president Soeharto.

The remaining 7 percent is owned by the Salim Group, the founder of BCA.

Some of the bigger potential investors met by IBRA during the Singapore and Hong Kong road shows were Invesco, Schroders, HSBC, Dresdner RCM, Fidelity, ADIA, SSB-Citi, Deutsche Asset Management, Jardine Fleming, JP Morgan, Morgan Stanley, Indocam, and Government of Singapore Investment Corp. (GSIC).

"Many strategic investors have expressed interest in buying BCA shares," Jerry said.

Asked about the specific plans to be made by the GSIC, Jerry said: "They want to become a catalyst (for Indonesia's economic recovery)."

GSIC has expressed its intention to buy several of IBRA's assets.

Last month, the company partly purchased the shares of giant automotive PT Astra International which were divested by IBRA.

BCA was one of the country's largest private banks before the government nationalized it.

The bank booked a net profit of around Rp 641 billion (US$80 million) in 1999 compared to a loss of more than Rp 28 trillion in 1998.

BCA president Johan Emir Setijoso said that first quarter 2000 net profit was Rp 370 billion.