PT Trans Airways, owned by one of Indonesia’s richest businessmen, Chairul Tanjung, completed on Friday Rp 1.53 trillion (US$166.8 million) in transactions to purchase a 10.9 percent stake in national flag carrier PT Garuda Indonesia (GIAA).
Chairul, who also chairs the government-appointed think tank, the National Economic Committee (KEN), purchased the shares from underwriters of Garuda’s initial public offering (IPO), which absorbed all unsold shares during the initial shares offer in February 2011.
Trans Airways, a unit of Chairul’s CT Corp group, bought 2.46 million shares at Rp 620 each, meaning the underwriters lost 17.3 percent from the price they bought shares during the IPO.
“Garuda’s fundamental value is actually at [Rp 620]” and therefore it is a fair price, said Eko Yuliantoro, president director of PT Bahana Securities, one of the underwriters.
Shares in Garuda closed at Rp 710 on Friday, the highest price since they went public and up 9.23 percent from the previous day.
Garuda’s IPO received a cool response from investors last year when analysts said the company was overpriced compared with its regional peers, especially with revenues under pressure prior to the offering due to soaring global oil prices.
The bearish mood in the local stock exchange exacerbated the negative circumstances surrounding the IPO, which saw 47 percent of its 6.33 billion shares offered unsold, leading to them being absorbed by the underwriters, which acted as standby buyers for the sale.
The shares have burdened the finances of the three state securities houses PT Danareksa Sekuritas, PT Mandiri Sekuritas and Bahana, because Garuda’s stock never traded as high as its initial offering price of Rp 750 apiece.
Danareksa Sekuritas president director Marciano Herman said the release of Garuda’s shares from the company’s books will result in better financial performance.
“Now we can revise our working plans and hope that we will report better profits,” Marciano said.
State firms PT BNI Securities and airport operator PT Angkasa Pura, which also absorbed unsold Garuda shares, did not join the deal with Trans Airways, said Andy Purwohardono, president director of Morgan Stanley Indonesia, which served as a financial advisor for the transaction.
Garuda president director Emirsyah Satar said the company supported the entry of a national businessman into the airline.
“This is better than selling the shares to foreign entities. Garuda has big potential,” Emirsyah said after a shareholder meeting.
Bahana’s Eko claimed that the deal was made at the right time considering that airlines are a cyclical business.
“The airline reported good performance in 2011,” Eko said.
Garuda saw a 39.06 percent increase in revenue to Rp 27.16 trillion last year and its operating income surged to Rp 1.01 trillion after suffering a Rp 67.16 billion operating loss in 2010.
Shares in Garuda have soared almost 50 percent so far this year on expectations that the company would maintain last year’s performance as it planned to add flights and fleet this year that consumed less fuel with lower maintenance and operating costs to help offset the impact of fuel costs.
“The pricing of [Rp 620] was based on an offering letter proposed on April 12. We signed the deal on April 13,” Eko said.
The offer price was a 3.3 percent premium above the April 11 closing price of Rp 600 apiece, he added. Garuda’s stock hovered between Rp 395 to Rp 640 a year prior to the deal.