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NEWS UPDATES 9 September 2010

Indo State firms to privatize

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The privatization of four state enterprises later this year will raise between Rp 30 trillion and Rp 35 trillion (US$3.8 billion) in fresh funds, for the government, State-Owned Enterprises Minister Mustafa Abubakar said.

The minister said national flagship carrier Garuda Indonesia and the largest steel-maker Krakatau Steel would launch initial public offerings (IPOs) while the country’s largest bank, Bank Mandiri, and the oldest commercial bank, Bank Negara Indonesia (BNI) would also sell shares between October and December.

Mandiri and BNI said they would raise Rp 14 trillion and Rp 10 trillion respectively from their rights issues.

According to the State-Owned Enterprises Minister, Krakatau Steel would mobilize between Rp 4trillion and Rp 5 trillion, while Garuda Indonesia president director previously said that the company expected to raise US$250 million to $300 million.

Mustafa added that the ministry had approved three state-owned underwriters to arrange Mandiri’s rights issue, namely Mandiri Sekuritas, Danareksa Sekuritas and Bahana Securities. “[The three underwriters] are ensured as arrangers [for Mandiri’s rights issue] and we have asked them to appoint other international underwriters.”

Chief financial officer of Bank Mandiri, Pahala Mansury, previously said that government’s share of ownership in the bank would be diluted by 6 to 7 percent and public participation will grow from about 33 to 44 percent following the rights issue.

Mandiri’s president director Zulkifli Zaini added he expected the new share sales to be launched before the second week of December, since the market would slow a couple of weeks ahead of New Year.

BNI also announced it would launch its Rp 10 trillion rights issue in December.

Mahmuddin Yasin, deputy for privatization at the state enterprises ministry, said Bahana Securities had been appointed as sole bookrunner for BNI’s rights issue, alongside five international underwriters, namely Goldman Sachs, UBS Securities, Morgan Stanley Securities, Macquarie Securities and Credit Suisse Securities.

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