Mandiri expects to raise up to $1.5b from IPO

JAKARTA (JP): Bank Mandiri expects to raise between US$1.2 billion and $1.5 billion from its planned initial public offering, the bank's president, Robby Djohan, said on Tuesday.

Robby said the projected fresh funds would be obtained from the sale of the bank's 25 percent share in the IPO, set for between August and October this year.

He said a large part of the IPO proceeds would be used by the bank to extend new credit to industrial firms, which are currently in dire need of capital to fully recover their operations.

"We started to give new loans to the industrial sector this month, and would like to achieve between Rp 8 trillion ($1.15 billion) and Rp 10 trillion in new loans by end of this year," Robby said.

Bank Mandiri's new loans will be extended to export-oriented companies, companies undergoing debt restructuring programs and small to medium-scaled companies.

Robby said the IPO decision was supported by the recommendation made by Bank Mandiri's financial consultants.

"For the IPO plan, we appointed two of the world's top securities houses to project Bank Mandiri's performance over the next three years. They were also tasked with evaluating whether Bank Mandiri, in the first place, should go ahead with the IPO," Robby said during a business gathering.

Robby asserted that the bank would be listed here on the domestic stock exchanges, but added he planned to go on a road show abroad to incite potential investors from Europe, the United States and a number of Asian countries to invest in Bank Mandiri equity.

Bank Mandiri, which has a total of 735 branch offices, will downsize to only 530 branches in a bid to maintain efficiency.

"Besides branch rationalization, we will be replacing branch managers, renovating the branch offices and we will train our officers to be market-oriented," Robby said.

Particularly for the branch office downsizing program, Robby said, Bank Mandiri had hired the foreign consultancy firm McKinsey.

"We want to make all our branch offices profitable," he added.

Bank Mandiri is a result of a merger of four state banks, namely, Bank Dagang Negara, Bank Bumi Daya, Bank Exim and Bank Pembangunan Indonesia.

The government recently completed Bank Mandiri's recapitalization program at a total cost of Rp 178 trillion.(udi)