The Indonesian Bank Restructuring Agency (IBRA) sold down a further 10% of its stake in Bank Central Asia (BCA) last Friday in a Rp530 billion offering ($47 million).
Led by Danareksa and Merrill Lynch, a 588.8 million share deal closed just over two times over-subscribed and was priced at Rp900, a slim 2.75% discount to Thursday's Rp925 close. By the end of the day, the stock was up to Rp950, its first rise in over a week.
The small size of the transaction ensured that demand stayed tight, with a total of about 12 investors participating in an international book that comprised roughly 25% of the overall deal. Of these dozen accounts, about half came from the US and a quarter each from Europe and Asia. About 80% are also said to have been existing holders of BCA stock and most were either country funds, or specialist bank funds.
On a relative basis, BCA represented one of Asia's better performing IPO's of 2000 and as of Friday's close had returned investors 35.23% on a total return basis over the past 12 months. Year-to-date the stock is up 13.42%, outperforming the Jakarta Composite Index, up a lesser 3.9%.
The initial IPO of May 10 was priced at Rp1,400 per share, although there has been a two for one stock split since then at Rp700. This deal, also led by Danareksa and Merrill Lynch alongside Lehman Brothers and Bahana, comprised a sale of 662.4 million shares on a price to book value of 0.7 times 2000 earnings. The current sale has been completed at 0.8 times book against 2000 earnings, or 0.6 times against 2001 earnings.
Before the financial crisis, BCA ranked as Indonesia’s largest private bank under its ownership by the Salim family. It now ranks as the country’s second largest in terms of deposits and third largest in terms of assets. IBRA, meanwhile, has seen its stake reduce from 93% pre-IPO to 70.3% post IPO and now stands at 60.3%. Next it intends to sell a further 20% to 30% in a strategic stake for which bids are currently being taken.
Over the past year, BCA has also been able to reduce its dependence on government bonds to fill its portfolio. From 94% in May 2000, the ratio of government bonds to commercial loans is now down to 60%/40%. So too, the bank is said to have been able to reduce its NPL’s from 10% to 4.2% and currently has a capital adequacy ratio of 35%.
