Market positive about RI privatization plan
JAKARTA (JP): The international market is positive about Indonesia's plan to privatize state firms, according to investment bank Goldman Sachs.
Goldman Sachs (Asia) L.L.C. managing directors Peter G.C. Mallinson and Timothy D. Dattels told journalists here yesterday state-owned "quality companies" would sell well.
"Very high quality companies could meet good interests. Whether PT Telkom or Indosat... plus other unlisted companies, at the moment there are investors who are willing to put a substantial amount of money into an attractive Indonesian equity or equity-linked issue," Mallinson said.
He was referring to the government's recent announcement to make additional divestment in five state listed firms and float seven more state firms.
The five listed firms which the government will divest more of its stake are local telephone operator PT Telkom, satellite operator PT Indosat, cement producer PT Semen Gresik, tin mining firm PT Tambang Timah and nickel and gold mining company PT Aneka Tambang.
The seven companies being prepared for initial public offering are PT Krakatau Steel (steel maker), PT Pelindo II and PT Pelindo III (port infrastructure and management), PT Jasa Marga (toll roads), PT Perkebunan Nusantara IV (oil palm plantations), PT Tambang Batubara Bukit Asam (coal mining), and PT Angkasa Pura II (airport management).
Dattels, the head of Goldman Sachs' investment division for Asia, excluding Japan, added: "We have a lot of confidence in Tanri Abeng and his team. They have deep understanding on the issue of privatization."
Tanri Abeng is the state minister of the empowerment of state enterprises.
Dattels noted that the "successful" offering of Asia Pulp and Paper (APP)'s US$500 million convertible bonds indicated that confidence was building up on Indonesia's economy.
"Somebody investing in APP is ultimately investing in Indonesia. To us, this transaction is a major vote of confidence on Indonesia's economy," he said.
He said APP's offering size was initially indicated at $250 million. However, because of strong demand from the market, with oversubscription of six times the offer, the final deal totaled $500 million.
About 80 percent of the total were U.S.-based investors, European investors accounted for 15 percent and Asians 5 percent.
Some critics, however, have said that the success of APP's $500 million issue should not necessarily reflect the return of foreign investors' confidence in Indonesia as APP is basically a Singapore company listed on the New York Stock Exchange.
Dattels dismissed such criticism, saying that although APP is incorporated in Singapore, the market viewed it as an Indonesian company as most of its assets are in Indonesia.
APP, a forest product group, is 86.2 percent owned by APP Global Ltd., a company controlled by the Sinar Mas Group.
APP has integrated operations of forestry management, pulp manufacture, fine paper and industrial paper manufacture and paper distribution.
Its subsidiaries include PT Indah Kiat and Paper, PT Pabrik Kertas Tjiwi Kimia, PT Lontar Papyrus Pulp and Paper Industry and PT Pindo Deli Pulp and Paper Mills -- all in Indonesia.
While well established on several large-scale sites in Indonesia, the APP group more recently has expanded its operations to India and China and is committed to a large pulp mill in Malaysia.
Mallinson, the head of Goldman Sachs' equity division for Asia, excluding Japan, noted that APP happened to be in an industry which had been enjoying increasing sales prices in dollar terms.
He said the sales of such export-oriented companies would be warmly welcomed by the market. Besides, state companies in strategic industries or those with large domestic franchises and strong management teams would also sell well in the market, provided they had a healthy level of debt. "Investors are very sensitive about debt levels." (rid)