PTPN VII IPO delayed; Kimia Farma to offer right shares

The government has announced privatization plans for several state firms in 2012, including right shares offerings by lender PT Bank Tabungan Negara Tbk (BBTN) and pharmaceutical firm PT Kimia Farma Tbk (KAEF), an initial public offering (IPO) of cement maker PT Semen Baturaja, and strategic sales involving three other companies.

State-Owned Enterprises Minister Dahlan Iskan said that he expected at least three state firms to float shares on the Indonesia Stock Exchange (IDX) this year, but said the IPO plans for pawnshop PT Pegadaian and plantation company PT Perkebunan Nusantara (PTPN) VII would be delayed.

“The President and the coordinating economic minister also want more state firms to go public to participate in the capital market, so we will seek other state firms that could possibly launch IPOs,” he told a news conference on Tuesday.

Semen Baturaja is on track to launch its IPO in the third quarter of this year. It expects to raise about Rp 1 trillion by floating up to 35 percent of its enlarged capital to partially finance a Rp 2.5 trillion cement factory in South Sumatra with an annual production capacity of 1.5 million tons — which would double the company’s current combined output of 1.5 million tons.

Bank BTN would offer 12 to 14 percent of its enlarged capital in a right shares offering in the second quarter at the soonest to boost capitalization and finance its lending plans, while Kimia Farma will also conduct a right shares issuance after a share swap transaction with vaccine maker PT Bio Farma, Coordinating Economic Minister Hatta Rajasa said.

“The country owns shares in Kimia Farma, and these will be swapped with shares of Bio Farma, so they can own each other. The two companies have been competing and that’s not appropriate,” Hatta said.

Publicly listed state pharmaceutical firm PT Indofarma was previously reported to have secured the deal with Kimia Farma.

Meanwhile, strategic sales would be done for telecommunications firm PT Industri Telekomunikasi Indonesia (Inti), PT Industri Sandang Nusantara, PT Industri Gelas (Iglas), but the investors would be strictly state firms engaged in similar fields as the companies they want to acquire.

Under Dahlan’s leadership, 141 state firms might see more mergers or acquisitions as he considered many companies in one line of business as inefficient and too costly to boost their growth.

IPOs are considered crucial because listed firms have more access to funds and are better-managed both financially and in terms of governance because the public has access to them.

Semen Baturaja will conduct a beauty contest to appoint underwriters for the initial shares offering next month, president director Dwi Soetjipto said earlier this month. However, IPO plans for Pegadaian and PTPN VII might fall through.

“There needs to be thorough assessment considering Pegadaian serves the ‘small people’, those who really need cash. Don’t let it fall into the hands of highly profit-oriented companies that might disrupt the government’s mission to save the small people,” he said, adding that PTPN VII’s IPO process would begin after the company had adapted to the new holding company model.