B

ank Pembangunan Daerah Jawa Timur (Bank Jatim) expects to raise up to Rp 1.9 trillion (US$212 million) from an initial public offering (IPO), which will be launched early next month.

Bank Jatim’s president director, Hadi Sukrianto, said on Tuesday that the bank, which is owned by the East Java provincial government, would sell 20 percent of its enlarged shares to the public during an offering period on July 3 – 5.

Hadi said he was optimistic that the bank’s IPO would receive a positive response from investors despite the bearish conditions on the local stock market.

 “Initially, we aimed to sell 25 percent of our enlarged capital, but we downsized due to current market conditions,” said Hadi.

“However, we still saw sufficient demand from potential investors during the pre-marketing campaign; therefore, we have a positive outlook about the IPO,” he added.

The bank plans to sell the shares at between Rp 430 and Rp 670 per share, and they will be listed on the Indonesia Stock Exchange (IDX) on July 11.

Bahana Securities and Mandiri Sekuritas have been named the underwriters for the IPO.

According to Hadi, 80 percent of the IPO proceeds will be used for credit expansion, which will be focused more on providing loans to small and medium enterprises (SMEs).

“Up until now, our core business has been in providing consumer loans, but gradually we will shift to SMEs due to the large SME potential in East Java,” he added.

Total loans provided by the bank for SMEs in 2011 reached Rp 13.5 trillion, an increase from Rp 11 trillion a year earlier.

Established in 1961 and becoming a provincially owned company (BUMD) in 1976, Bank Jatim had a total of 292,832 customers last year, up from 288,014 in 2010.

The bank booked Rp 16.1 trillion in total loans and Rp 20.1 trillion in third-party funds as of the end of last year, making it the second-
largest regional development bank in Indonesia after Bank Pembangunan Daerah Jawa Barat (BJB).

Last year, Bank Jatim also reaped Rp 2.8 trillion in interest income, Rp 1.2 trillion in operating profits and Rp 900 billion in net profits.

At the end of 2011, Bank Jatim recorded total assets of Rp 24.8 trillion, with a capital adequacy ratio (CAR) of 20.99 percent.

“We are aiming to increase our profits to Rp 1.2 trillion this year, and we are hoping our CAR will increase to 16 to 17 percent by 2016,” said Hadi.

He also said that 10 percent of the IPO proceeds would be allocated for branch expansion, while the remaining 10 percent would be used to support IT development in the company.

“We will still focus our branch expansion on East Java. The 25 new branches that will be opened this year will primarily be located in East Java, with just three branches opening in Jakarta,” he said, adding that the investment value of each branch would reach up to Rp 1 billion.

The bank currently has a total of 759 network sites, including branches and ATMs, spread across East Java.

Several other companies confirmed they would also be pursuing their IPOs despite the challenging stock market conditions. Some of the firms, including PT Kobexindo Tractors, PT Trisula International, PT Toba Bara Sejahtra and PT MNC Sky Vision, have disseminated information about the expected prices of their shares.

Other companies intending to go public in the near future are PT Global Teleshop, PT Gading Developments, PT Asuransi Mitra Maparya, Bank Pembangunan Daerah Jawa Timur and PT Tri Banyan Tirta. (nad)