Jamsostek wants to invest heavily in bank IPO
Rendi A. Witular, The Jakarta Post, Jakarta
State-owned insurance firm PT Jamsostek is seeking to purchase at least one billion shares in state-owned Bank Rakyat Indonesia (BRI), or the equivalent of around 25 percent of the total shares to be sold through the bank's upcoming initial public offering (IPO), a senior official said.
Jamsostek president Ahmad Junaedi told The Jakarta Post during the weekend that the purchase plan was not merely in line with the company's investment strategy, but was also aimed at helping ensure the success of the government program.
"We have ordered at least one billion shares in BRI, mainly on the back of our investment strategy, but also because of a government instruction," said Ahmad.
He explained that Jamsostek had planned to allocate half of the BRI shares for short-term investment, because the company had estimated the price of the shares to rise to more than Rp 1,100 per share following their debut on the stock market.
The government is planning to sell 4.23 billion shares in BRI (a 36 percent stake) through an IPO with a price range of between Rp 700 and Rp 875 per share. This is part of a privatization program to raise cash to help cover the state budget deficit.
If the price is set at Rp 875 per share and Jamsostek manages to get what it has ordered, the company will have to cough up about Rp 875 billion (US$104 million) to pay the shares.
The final pricing for the IPO will be decided on Oct. 28, while the offering is scheduled to take place from Nov. 3 to Nov. 5, with the shares being listed on the Jakarta Stock Exchange and Surabaya Stock Exchange for the first time on Nov. 10.
Ahmad said the money to be spent on BRI would not affect Jamsostek's cash flow as the firm currently managed a total of Rp 23.1 trillion raised from workers in the country.
He explained that investing in BRI would ensure a good return because of the high level of demand for the shares and because of the bank's strong fundamentals.
Indeed, government officials have claimed that the BRI share offer has been six times oversubscribed based on the orders taken during the most recent domestic and international roadshows.
Jamsostek is the only local institutional investor able to move the Jakarta Composite Index. As of September, the company had invested around Rp 2.5 trillion in the stock market.
A source in Jamsostek acknowledged that the company had received an instruction from the government to pour money into the stock market in order to help lift the Index ahead of the IPO plans for BRI and state-owned gas company PT Perusahaan Gas Negara (PGN).
The government is planning to sell about a 30 percent stake in PGN later in December.
Over the last three months, the index has jumped by around 146 points to 634 as of Friday's closing from around 480 in mid August.
Some analysts are suspicious that the rapid surge in the index is mainly because of government intervention ahead of the IPOs.
They explained that for the last five years, trading on the stock market during September and November was usually thin, and that the sudden rise in the index was an anomaly.
They said the government had been using Jamsostek and other state-owned financial companies recently to help lift the Index.