Sale of Telkom boosts investment weighting

Tantri Yuliandini, The Jakarta Post, Jakarta

Last week's sale of 11.9 percent of the shares of the state- owned telecommunications company, PT Telkom, has been given a boost thanks to Indonesia's investibility weighting, a senior analyst from UBS Warburg said.

"This means fund managers will be putting more money into the country, which would put more pressure to buy in the market, and increase stock prices," associate director of UBS Warburg's research department Ray Anthony told The Jakarta Post Tuesday.

He said that the FTSE average weighting for Indonesia compared to the rest of the world has increased to 0.03 percent from 0.02 percent prior to the sale, meaning investors' money circulating in Indonesia now represents 0.03 percent of all money circulating around the world.

FTSE is a London-based index calculation specialist.

Besides Japan, Indonesia's weighted average in Asia increased to 1.04 percent from 0.93 percent previously, while in Asia Pacific it increased to 0.67 percent from 0.60 percent.

The government sold 11.9 percent of its shares, or 1.2 million shares, in PT Telkom on Dec. 7 at Rp 2,600 per share, or discounted by 3.7 percent of the market price, bringing in US$300 million.

Prior to the sale, the government had owned 66.19 percent of Telkom.

Despite beliefs that the shares were undervalued, and criticisms that the government should have waited until prices rose, Ray said that the timing was perfect to take advantage of the current shift in investors' sentiment towards growth and Indonesia as a country.

"The best time to sell would have been in August, just after Megawati was appointed president, but then it would be more difficult to find a buyer, because her credibility is not yet tested," he said; apart from the performance of the company itself, he added, investors were concerned about the political and economic situation of the country.

Ray also said demand for the company was high, but that there was marked by a drop off in demand above the Rp 2,600 level.

Furthermore, he said initially that the deal size was between $125 million to $250 million, and priced at a discount of between 4 percent and 6 percent.

Of the 95 investors who bought Telkom, some 36 percent were Asian investors, 33 percent were from the United Kingdom and Europe, while 17 percent from the United States, and 14 percent from Indonesia, he said, adding that the biggest local buyer was Jamsostek.

UBS Warburg constituted 34.7 percent of the sale, Merril Lynch 31.7 percent, Goldman Sachs 19.8 percent, and PT Bahana Securities constituted 13.8 percent of the sale.