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Garuda’s unsold IPO shares set for offering

Three underwriters serving for last year’s initial public offering (IPO) of PT Garuda Indonesia (GIAA) will start offering the flag carrier’s unsold shares next week and may see interest coming from foreign investors, officials say

Raras Cahyafitri (The Jakarta Post)
Jakarta
Sat, March 17, 2012

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Garuda’s unsold IPO shares set for offering

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hree underwriters serving for last year’s initial public offering (IPO) of PT Garuda Indonesia (GIAA) will start offering the flag carrier’s unsold shares next week and may see interest coming from foreign investors, officials say.

State-Owned Enterprises Minister Dahlan Iskan said he had told foreign investors from Singapore and Hong Kong to buy the shares from state securities houses Mandiri Sekuritas, Danareksa Sekuritas and Bahana Securities.

The three underwriters, which are required to sell the entire IPO issue, had to spend Rp 1.41 trillion (US$155 million) to purchase Garuda’s unsold shares during the February 2011 IPO. Only 53 percent of the shares offered were absorbed by investors due to what was considered an expensive price of Rp 750 per share.

Garuda’s shares are currently traded at Rp 620 each, or 17 percent lower than last year, further straining the underwriters’ finances.

“The unsold shares should be sold 10 percent higher than the market price,” Dahlan said.

“All unsold shares among the three underwriters should be sold to investors by the end of this month because the underwriters are burdened by the shares,” he recently told reporters without disclosing the value of the losses, other than saying that it was “a lot”.

The minister has requested Indonesian business tycoons to purchase the shares from the securities houses, including Nirwan Bakrie, Chairul Tanjung, Sandiaga Uno, Anthony Salim and Rachmat Gobel. Adding to the
effort was an advertisement on local television to accelerate the share offering.

Bahana Securities currently holds 990.45 million shares, or 4.37 percent of Garuda’s total 22 billion shares. Danareksa Sekuritas and its parent company owned 4.42 percent, while Mandiri Sekuritas had 2.09 percent, according to Garuda’s financial report.

The underwriters were not available for immediate comment on the matter when contacted by The Jakarta Post.

Parikesit Soeprapto, the deputy of banking and financial service of the State-Owned Enterprises Ministry, said that other state-owned firms — namely airport operator Angkasa Pura and BNI Securities, a unit of Bank Negara Indonesia (BNI) — would also be allowed to off load their stake during the offering period.

“We prioritize the three securities companies [rights] to sell their shares in Garuda. However, we also allow other state-owned firms purchasing the airline’s unsold shares to off load,” Parikesit said.

Angkasa Pura I and Angaksa Pura II respectively had 1.1 percent and 1.78 percent of Garuda shares.

The government remained the majority shareholder of the flagship airline with 69.14 percent ownership, while the public owned the remaining 17 percent.

Parikesit said the State-Owned Ministry preferred local investors to own Garuda’s shares. “However, we see prospects for foreign investors to absorb the shares.”

The underwriters — Mandiri Sekuritas, Danareksa Sekuritas and Bahana Securities — could determine their own mechanisms to offer Garuda’s shares because Parikesit believed that it was their specialty to do so.

“They may send letters to the investors and wait for replies, hopefully before the end of the month,” he said, citing that Bahana Securities as the institution that has suffered the most compared to the other underwriters.

However, Parikesit added, there was no intention to prioritize one over another.

“We want that they sell their shares in Garuda at the same time. We cannot let one of the three companies sell their shares while the others remain on hold,” he said. (nfo)

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