The Indonesia Deposit Insurance Corporation (LPS) has opened another offering of Bank Mutiara’s shares after failing to find suitable buyers over the last two consecutive years.
The paperwork submission period would run until May 15, the LPS announced on Thursday. It has again appointed state-owned securities firm PT Danareksa Sekuritas as its financial advisor.
Danareksa has received letters of interest from two potential investors since the offering was opened on Jan. 21, according to president director Marciano Herman, while declining to name the bidders.
Bank Mutiara, formerly known as Bank Century, has been on the market for Rp 6.7 trillion (US$688.95 million) since 2011. It is now 99.9 percent owned by the LPS, which took it over in the 2008 bailout.
As required by Article 42 of Law No. 24/2004 on the LPS, all shares of any bank rescued by the LPS,
including Mutiara, must be sold at their purchase price within three years of the rescue.
The time of sale may be extended a maximum of two times, with each extension lasting for one year. The publicly listed bank’s high price has so far been the main reason for a lack of serious investors. Mutiara’s price-to-book value (PBV) ratio has been deemed too high as well, considering the book value of its equity was Rp 1.38 trillion as of December 2012.
LPS finance director Mirza Mochtar said that any interested investor who lacked the required capital was allowed to form a consortium with other parties to be able to finance the purchase. “What is important is that we will sell the shares for a total of Rp 6.7 trillion in one go,” he said.
According to data from LPS, in 2011, there were nine investors who expressed an interest in buying the bank, but only three submitted the necessary documents. None of them passed LPS’ document verification stage.
Seven parties expressed interest last year, but only three submitted the necessary paperwork. Again, no investors were able to meet LPS’ requirements.
Publicly listed toll road operator PT Citra Marga Nusaphala Persada stated in December 2012 — four months after the offering was closed — that it was interested in acquiring Mutiara’s shares, but admitted that it would not be able to purchase the bank in a one-time payment, citing internal cash limitations.
If no deal is made by 2014, Mutiara can be sold to the highest bidder, regardless of the purchase price. According to Mirza, if that is the case, the bank will be revaluated to determine its financial prospect. “Hopefully Bank Indonesia’s new regulation on bank shares ownership will be an added value in Mutiara’s sale,” he said.
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