Makindo to sell 40 percent of shares to public

JAKARTA (JP): PT Makindo, one of the country's major securities companies, will go ahead with its capital market debut despite the bearish condition of the stock market.

Makindo, the third securities firm to be listed on the Jakarta Stock Exchange (JSX) after Lippo Securities and Bhakti Investama, plans to sell about 377 million shares, or 39.9 percent of its enlarged capital, to the public early next month.

Makindo's president Gunawan Jusuf said the company's shares, each with a par value of Rp 500, would be sold at a price earnings ratio (PER) of between 7 and 10 times its 1998 earnings per share forecast.

He said the company expected to raise about Rp 400 billion (US$123.07 million) from the initial public offering.

Gunawan said about 40 percent of the proceeds would be used to finance the company's portfolio investment, 27 percent for capital market financing, 16 percent to strengthen money management services and 13 percent to increase the company's working capital.

"The remaining 4 percent will be used to improve the company's information technology services," he said.

Deutsche Morgan Grenfell Indonesia will become the lead underwriter for the company's capital debut this year.

Gunawan said he was optimistic about the company's plan, even though global and domestic markets were still bearish.

He said some choosy investors would prefer to invest in "well- valued stocks" like Makindo.

"The Indonesian stock market is the favorite market in the ASEAN region and there are some choosy investors who prefer to invest in valued stocks," he said yesterday.

"I think long-term institutional investors will change this terrible market situation into a great investment opportunity," he said, adding that long-term investors would continue to buy big.

Tan Yong Seng, director of equity at Deutsche Morgan Grenfell Indonesia, said foreign investors still had a high interest in Makindo stocks.

"Foreign investors have expressed a keen interest in the company's stocks," Seng said.

Gunawan said the company would list its shares on the Jakarta Stock Exchange early in January.

He said Makindo, which dealt in stock underwriting and selling, securities trading and brokerage, and private placement, had total revenues of Rp 36.8 billion in the first half of this year, compared to Rp 10.3 billion in the corresponding period last year.

He said the company also booked a net income of Rp 27 billion in the first half of this year against Rp 9.7 billion last year.

However, an analyst with a joint-venture securities firm said new issuers like Makindo would likely encounter stormy weather in the capital market.

"I think they just want to test the waters," he said. (aly)