Sat, 05 Jul 2003

Mandiri wraps up successful share sell-off

Rendi A. Witular, The Jakarta Post, Jakarta

Bank Mandiri, Indonesia's biggest bank, successfully closed its three-day initial public offering (IPO) to local retail investors on Friday with more than 700 million shares having been snapped up by close of business.

Managing director of Danareksa Sekuritas Wahzari Wardaya told The Jakarta Post that the offering had been successful, with robust demand coming from local investors.

"We still need time to calculate all the figures, but we estimate that our allocation of shares for retail investors is likely to go beyond our expectations," said Wahzari.

Danareksa is one of Mandiri's underwriters, along with ABN Amro Asia Securities Indonesia and Credit Suisse First Boston Indonesia.

It is estimated Mandiri will rake in more than Rp 500 billion (US$60.9 million) from the sale to retail investors, adding to the previous Rp 1.96 trillion raised from the sale of 2.9 billion shares to institutional investors.

As reported by Bloomberg on Friday, on the second day of the offering Mandiri managed to make Rp 450 billion at a retail share price of Rp 655 per share, a 3 percent discount from the price set for institutional investors of Rp 675.

Mandiri president E.C.W. Neloe previously said that the IPO was 6.5 times oversubscribed with 24 billion shares having been requested by foreign investors and three billion by locals.

Rumors circulating in the market say that big overseas investment companies such as Schroders, Martin Currie, Morgan Stanley Asset Management, Handerson and Scottish Widows had set their sights on large volumes of Mandiri shares.

However, Mandiri's underwriters said that the identity of the investors remained confidential.

Bank Mandiri will list its shares on the Jakarta Stock Exchange on July 19.

The Mandiri success story may well raise confidence regarding the government's plan to sell about 30 percent of the shares in Bank Rakyat Indonesia, the country's number four bank, and other banks such as Bank Negara Indonesia, Bank Lippo, Bank Internasional Indonesia and Bank Permata. The last three banks were acquired by the government in the wake of the late 1990s financial crisis.

The government had set itself a target of earning Rp 2.7 trillion from the sale of the 20 percent stake in Bank Mandiri. All of the proceeds will be used to help plug the state budget, deficit which this year may reach Rp 34 trillion.

With the IPO, the government is also expected to recoup some of the more than $66 billion in recapitalization funds it disbursed to rescue local banks in 1997-1998.

Mandiri is the country's most heavily recapitalized bank, accounting for 27 percent of the overall bailout funds injected into the banks to replace problem loans taken over by the Indonesian Bank Restructuring Agency.

A number of skeptical analysts have said that Mandiri was more like a bond fund rather than a bank as its assets were still dominated by the recap bonds. Some 60 percent of the bank's assets, worth Rp 260 trillion, take the form of recap bonds.

Mandiri's IPO triggered further strengthening of the rupiah against the U.S. dollar on Friday.

The rupiah closed at Rp 8,185, up from Thursday's Rp 8,222. Dealers said some foreign banks in Jakarta sold dollars on behalf of foreign investors buying Mandiri shares.