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NEWS UPDATES Asean Affairs        13 January 2011

Garuda IPO sets high mark

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PT Garuda Indonesia, Indonesia's flag carrier, expects to raise up to $1.1 billion in an initial public offering next month that could be the country's second largest, though its valuation looked higher than comparable airlines in the region.

The government's offering for the state carrier is aimed at tapping a boom in investor interest in Indonesia, though stocks have slipped this year after a record rally in 2009 and Garuda's price range was set about 30 percent higher than expected.

"I'm on my way to Singapore to meet international investors and I don't know how we can sell this stock," said a source with knowledge of the deal. "In November, the company even recorded a net loss, mostly due to a volcano eruption in Java."

The government set the price range at 750-1,100 rupiah ($0.083-$0.122) per share, said Mustafa Abubakar, the state-owned enterprises minister. Two sources with knowledge of the deal told Reuters the government rejected a range of 560-850 rupiah suggested by underwriters on Tuesday. Indonesia's President Susilo Bambang Yudhoyono held a special meeting on Wednesday at the state palace with Abubakar, the finance and chief economic ministers to talk about the price after underwriters submitted their suggestion, the sources said.

The firm has said that it will offer a 36.5 percent stake, or 9.362 billion new and existing shares, and if the top end of the range is met it would make it second only to the launch of PT Adaro Energy, which raised $1.3 billion in 2008.

"I need to see what is in their books first before I decide to buy, but it looks quite expensive," said Winston Sual of Panin Securities, the nation's best performing fund manager in 2010.

Garuda's price range reflects 7.4 to 10.8 times its Enterprise Value (EV) to EBITDA, said Iman Rachman, head of investment banking at Mandiri Sekuritas, one of the local underwriters. That is higher than regional peers such as Singapore Airlines with an EV to EBITDA at 4.9 times, and Thai Airways at 5 times, according to data from Thomson Reuters' Starmine.

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This year in Thailand-what next?

04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More

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