Mandiri IPO price set at Rp 569 to Rp 695 per share
Rendi A. Witular, The Jakarta Post, Jakarta
Bank Mandiri, Indonesia's largest bank in terms of assets, will offer its shares to the public via an initial public offering (IPO) at a price range of between Rp 569 and Rp 695 (around 15 U.S. cents) per share, a government official said.
State Minister for State Enterprises Laksamana Sukardi said this was a good price target, representing between 0.9-1.1 times the bank's book value.
"We hope to be able to sell the shares at a good price as the timing of the IPO is appropriate amid the country's improving macroeconomic picture and a bullish stock market," he said during the bank's public expose on Wednesday.
According to the president of securities firm PT Danareksa Sekuritas, Wahzary Wardaya, who was speaking in a press briefing, Bank Mandiri's book value is around Rp 12.64 trillion, or roughly Rp 632 rupiah a share.
Danareksa and PT ABN Amro Asia Securities Indonesia are the underwriters for the IPO.
The government plans to sell a 15 percent stake (or around three billion shares) in Bank Mandiri, in the largest IPO so far this year.
All proceeds from the privatization program will go to help finance the 2003 state budget deficit, estimated at about Rp 34.4 trillion, or 1.8 percent of gross domestic product.
The final pricing for the IPO will be decided on June 23 while the offering is scheduled to take place from July 2 to July 4, and the shares will be listed on the stock exchange on July 14.
Bank Mandiri president E.C.W Neloe told the press that a large part of the IPO, around 70 percent of the shares, would be allocated to foreign investors, while the remaining 30 percent would be for the local investors.
Neloe explained that foreign investors were being targeted in the IPO because they had greater investment power than local investors.
However, he added that the composition could change depending on local demand.
To attract investors to buy the shares, Bank Mandiri plans to allocate 50 percent of its 2003 net profit on a dividend, a promise that analysts said was aimed at appeasing investors who are worried that the bank's profits might be used mainly to cover past accumulated losses.
Bank Mandiri was formed via a merger of four state-owned banks in 1999. Before the merger, all of these banks (Bank Export Import Indonesia, Bank Pembangunan Indonesia, Bank Bumi Daya and Bank Dagang Negara), had been suffering financial losses.
The Bank Mandiri IPO has suffered several delays due to various problems ranging from administrative and legal snags to strong protests against the government privatization program and unfavorable stock market conditions.