Thu, 11 May 2000

Pupuk Kaltim and Indo Farma seen as first IPO candidates

By Reiner S

SANUR, Bali (JP): The government expects to be able to start selling state fertilizer firm PT Pupuk Kaltim and pharmaceutical company PT Indo Farma late in July or August.

Deputy minister for privatization and restructuring at the State Ministry for Investment and State Enterprises Development I Nyoman Tjager said the sales were part of efforts to privatize eight state enterprises this year.

Nyoman said on Wednesday that two companies were among four state firms expected to complete their privatization preparations by June.

"We expect that four companies will be ready for initial public offerings (IPOs) by June. We expect Kaltim and Indo Farma to be the first (to go on offer)", he told reporters on the sidelines of the second Asia Pacific Economic Cooperation (APEC) forum on privatization.

Nyoman said that the other two companies ready for IPOs by June could be plantation firms PT Perkebunan IV and PT Perkebunan III, or coal mining firm PT Tambang Batubara Bukit Asam.

He also said that the government's plan to privatize eight firms this year in a bid to raise about Rp 6.5 trillion (US$833.33 million) was still on track.

"We will do our best", he said in response to concerns about the current domestic political problems.

Meanwhile, Pupuk Kaltim president Syaiful Amir confirmed that the company had nearly completed preparations for its IPO.

He said the company had appointed state-owned PT Danareksa Securities as the lead underwriter, and would soon announce the co-underwriter.

"We expect to register at Bapepam in June," he said, referring to the country's capital market supervisory agency.

Syaiful declined to say how many shares the company would sell, but indicated that the target would be between 25 percent to 49 percent.

Syaiful said that Pupuk Kaltim has a production capacity of 2.4 million tons of urea per year, and was planning to increase it to 3 million tons by 2002.

He said that total assets in book value was about Rp 2.5 trillion and profit before tax in 1999 was Rp 532 billion, which was lower compared to Rp 800 billion in 1998, due to lower international fertilizer prices.

But Syaiful was confident that profits would improve in 2000 as fertilizer prices were increasing, and the markets in China and India were opening up.

"We see China as one of our largest markets", he said.

Syaiful said that Pupuk Kaltim exported some 40 percent of its production to the Philippines, Australia, Vietnam and other Southeast Asian nations last year.

He said that Pupuk Kaltim's modern facility, including a large shipping port, had enabled the company to export its products by using large ships of up to 40,000 deadweight tons, enabling it to compete with Middle Eastern producers and others in the region.

"The prospects for Pupuk Kaltim are bright", he said, pointing out that domestic market capacity was up to 5 million tons.

"We will be the first (Indonesian) fertilizer IPO ... We expect to be able to get the best price", he said.

A government source told The Jakarta Post that Pupuk Kaltim was projected to be the largest contributor to the IPO proceeds target in 2000.

Syaiful declined to confirm this, but admitted that Pupuk Kaltim was a large company.

"The process will depend on how many shares the government will sell", he said.

Separately, the head of the Indo Farma privatization program, Purwo Kartiko, also confirmed that the company had almost completed its IPO preparations.

"We also expect to be able to register at Bapepam in June," he said, but added that the IPO might start in August.

He said that Indo Farma's production capacity was about 3 billion tablets per year, and about 200 million capsules.

Purwo said that the company was also planning to expand its production capacity, to be financed by the IPO proceeds.

He said that the IPO would include the issuing and selling of the company's new shares and the divestment of the government's stake.

Purwo said that the net profit in 1999 was Rp 126 billion compared to Rp 49 billion in 1998 and that the net profit in 2000 was expected to jump to about Rp 170 billion.

Indo Farma's assets total about Rp 500 billion, he added.