Mandiri's IPO gets subdued response

Mandiri's IPO gets subdued response

Dadan Wijaksana, The Jakarta Post, Jakarta

The Bank Mandiri initial public offering (IPO) had been billed
as one of the most important business events in Indonesia this
year.

Given the fact that Mandiri is the country's largest bank and
the flurry of reports weeks before the IPO saying the shares had
been 6.5 times oversubscribed, many expected the IPO to represent
an important milestone in reviving the public's interest in the
stock exchange, which has declined greatly since the economic
crisis.

Comments from many analysts who predicted the IPO would be
successful also convinced many members of the public that the IPO
could strongly signal the country's economic recovery.

Yet, against the expectations of most people, the first day of
the IPO on Thursday appeared to be quiet.

Razzmatazz, bustling crowds, long queues of people eager to
place orders for shares -- which were common sights during
successful IPOs prior to the economic crisis -- were nowhere to
be seen in the office in the Bapindo Plaza complex where the bank
had opened its only counter in Jakarta for the registration of
retail investors willing to buy the bank's shares. Another
counter was operating in Surabaya.

The Jakarta counter was opened at 9 a.m. At 3 p.m., the bank's
president ECW Nelloe was scheduled to visit the counter for a
ceremony. But, to the disappointment of dozens of journalists and
photographers, including The Jakarta Post, who had been waiting
at the counter for more than an hour, he failed to show up.

Has the IPO failed to interest the public after all?

Not according to experts and people directly involved in the
IPO.

"It would be wrong to draw such a conclusion. It's only day
one, and we haven't even had preliminary figures suggesting that
demand was low," a banking industry researcher told the Post. The
public offering will last until Friday.

Efforts to seek the figures in question at Danareksa
Sekurities, the lead underwriter for the IPO, and also Mandiri,
were unsuccessful.

"It will take time to calculate all the figures. This is a
huge effort. So, we need to wait for the completion of the whole
offering, but I have no doubt that it will be a success," said
Wahzary Wardaya, Danareksa's managing director.

E. Agung Setiawati, director of Datindo Entrycom, which co-
organized the offering, also brushed aside suggestions of low
demand.

"In fact, we only opened two counters for the offering. But,
we also have a total of 24 underwriters and 55 selling agents
with whom retail investors and institutions can place orders,

"It's true that there were a small number of walk-in
investors. But, the number of people coming here does not reflect
the actual demand. For instance, I saw one selling agent today
taking orders on behalf of hundreds of investors."

The government initially planned to sell a 15 percent stake in
the bank, but citing high demand from investors the government
decided to raise the offer to 20 percent. The price has been set
at Rp 675 per share.

Prior to the IPO, analysts said Mandiri's IPO would not only
help revive investor confidence in the country's banking sector
and the government's commitment to reform, but it would also help
stabilize macroeconomic indicators, especially the rupiah.

Some analysts predicted that Mandiri's successful IPO would
push the rupiah to above 8,000 against the U.S. dollar as demand
for the local currency would increase to pay for purchases of the
bank's shares. The rupiah ended higher at 8,225 on Tuesday, up
from 8,245 at the previous close.