BNI sale marks RI's biggest offering

Wednesday, August 01, 2007
The Jakarta Post, Jakarta

Bank Negara Indonesia (BNI) and its controlling stakeholder, the government, have raised Rp 8.1 trillion (some US$885 million) selling 3,95 billion shares in the country's third largest bank via a secondary offering.

The sale, which reduces the government's stake in the bank to 73.3 percent from 99.1 percent, marks the country's biggest stock sale by value.

The government sold its shares in the bank at Rp 2,050 per share, State Minister for State Enterprises Sofyan Djalil told a press conference Tuesday. It had targeted a price range of Rp 2,050 and Rp 2,700 per share.

"We had a good response from investors although there was some disturbance in the market. But, it could be better. If only we had privatized BNI a week ago, the price of the shares would have been higher.

"In theory, we said that the timing was very good but the subprime mortgage situation in the U.S. has affected market appetite," Sofyan said, referring to the recent global market turmoil triggered by a Wall Street selloff.

Still, Sofyan said the stock offering, which attracted investors from Asia, the U.S. and Europe, was successful under the circumstances -- something he said reflected investor confidence in the country's economy, banking sector and BNI's prospects.

"By way of comparison, I think the buyer composition is 50:50 as between local and foreign investors."

The sale, arranged by Bahana Securities and JP Morgan, also raised the level of retail shareholding in BNI from less than 1 percent to 26.7 percent.

Of the total proceeds of this year's first divestment, around half would go into the state coffers, Sofyan said, with the rest being used to strengthen BNI's capital structure.

"The government and BNI will each get their share of the money," he explained.

The government has been selling its stakes in state-owned firms and companies it took over during the financial crisis to help plug the annual budget deficit.

Meanwhile, Bahana president director Ito Warsito acknowledged that the global market turmoil recently had affected the outcome of the BNI sale.

"Since last week, the international markets have fallen by 6 percent on average, and this definitely affected both domestic and foreign investors.

"It is not easy to offer as much as this. Some companies such as Chrysler and some other companies in Germany had to downsize their prices," he said.

BNI's shares plunged Rp 200, or 7.5 percent, to close Tuesday at Rp 2,475. (02)