[Nasional-e] Ibra heads for S'pore, HK to market Bank Danamon

[Holy Uncle]

http://business-times.asia1.com.sg/sub/premiumstory/0,4574,71590,00.html?

Published February 4, 2003

Ibra heads for S'pore, HK to market Bank Danamon
HSBC, Maybank seen to be among potential bidders for 51% stake

By SHOEB KAGDA
IN JAKARTA


THE Indonesian Bank Restructuring Agency (Ibra) hopes to get its 
privatisation programme back on track this week with a trip to Singapore and 
Hong Kong to market a 51 per cent stake in PT Bank Danamon, Indonesia's 
fifth largest bank.

And according to market sources, a number of international and regional 
financial powerhouses, including HSBC and Malaysia's Maybank are interested 
in acquiring a majority stake in the bank.

'This is a big one,' said one senior analyst at a foreign broking house. 
'The big boys are interested because the old owners do not have the 
financial resources to make a bid.'

Danamon was transferred to Ibra by previous owner Usman Admadjaja, who 
admitted in November that he had given up all hope of settling his debt with 
the state.

Ibra, which controls 99 per cent of Bank Danamon, also intends to invite 
local fund brokers and fund managers in a separate plan to sell as much as 
20 per cent of the bank through the stock market, said Syafruddin 
Temenggung, the agency's chairman. JP Morgan Chase & Co is advising Ibra on 
the stake sale.

But given investor concerns about a possible US-led war on Iraq, Ibra said 
last week that it would not force the Danamon sale through if economic and 
market conditions deteriorate.

Market analysts, however, pointed out that Ibra may have little choice but 
to push ahead as the government needs to sells assets to help fund an 
estimated 34.4 trillion rupiah (S$6.8 billion) budget deficit this year and 
meet conditions attached to International Monetary Fund loans.

A cancellation of the sale may sow doubt about Indonesia's ability to 
complete the planned sale of six other banks this year.

'I think it's better for Ibra to sell sooner rather than later because if 
war does break out, nobody knows how long it will last and what the fallout 
will be,' said one analyst.

Manoj Nanwani, deputy head of Research at BNP Paribas Peregrine, agreed, 
adding that Danamon was becoming an attractive buy as its share price has 
fallen 52 per cent year to date.

'Although the current free float is only one per cent, Danamon is going to 
become much more liquid going forward as Ibra offloads more shares in the 
market. Currently, I am cautiously optimistic but if the share price fall 
further, I would rate it a strong buy.'

Mr Nanwani noted that the bank was well-run and had a dynamic management 
team which had introduced some innovative deposit products which other banks 
were copying.

He added, however, that the government would have to quickly secure a 
strategic investor for the 51 per cent stake as retail investors and fund 
managers would not risk buying the stock if they are not sure who the 
ultimate owners will be.

'Local mutual funds and foreign fund managers will want to know who they are 
going to go to bed with before they decide to jump in,' Mr Nanwani said.

The sale of Danamon, worth about US$456 million at current market prices, 
was originally scheduled for last year.

It was postponed to March this year, then to April after a terrorist attack 
on the resort island of Bali last October raised concern investors would 
shun the offer.







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