Thu, 04 Dec 2003

PGN IPO price set at Rp 1,500 per share

The Jakarta Post, Jakarta

The government has decided to sell the shares of state-owned gas utility PT Perusahaan Gas Negara (PGN) via an initial public offering (IPO) next week at Rp 1,500 per share, a senior government official said.

Mahmuddin Yasin, deputy for privatization at the Office of State Minister of State Enterprises, said on Wednesday that at that price level, the IPO would result in some Rp 2.5 trillion in proceeds.

He said that around Rp 1.30 trillion of the proceeds would go to the state coffers, while the remaining Rp 1.2 trillion would go to PGN to help finance the company's gas pipeline project.

The government will sell 39 percent shares in PGN. Initially, the IPO was set at a price range of Rp 1,300 to Rp 2,100.

The PGN shares will be open for subscription on Dec. 8 to Dec. 10, and the stock will be listed on the Jakarta and Surabaya Stock Exchanges on Dec. 15.

The PGN IPO will be the government's last privatization program for this year. It comes following the successful IPO of state-owned Bank Rakyat Indonesia (BRI) last month.

The government has targeted to raise Rp 6.4 trillion in privatization proceeds this year, to help finance the 2003 state budget deficit. But with the PGN IPO, privatization revenue will reach Rp 7.46 trillion, which includes Rp 2.5 trillion raised from the IPO of Bank Mandiri, Rp 1.16 trillion from the sale of shares in publicly listed cement maker PT Indocement and Rp 2.5 trillion from BRI.

Elsewhere, Mahmuddin said that the PGN IPO price represented 2.7 times its book value or a price earning ratio of 13.2 times.

He said that at this price level, demand for the IPO was three times oversubscribed, of which 65 percent of the demand comes from foreign investors and the remainder from local investors mostly institutional investors. He added that most investors wanted to buy the PGN shares at a price level of Rp 1,300 per share.

Meanwhile, PGN president WMP Simandjuntak said that the company planned to issue up to US$400 million worth of bonds overseas in the first quarter of next year to help finance its gas pipeline projects.

He did not provide details of the bond plan, but in August, the company issued $150 million of 10-year bonds at a yield of 7.75 percent.

Simandjuntak said that the new bond plan was necessary because proceeds from the IPO was not sufficient to finance the gas pipeline transmission project from South Sumatra to West Java in a bid to cap the gas shortage on the heavily populated Java island.